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Questions › JNU › JNU SIS 2017 › Q26
2 marks, −1Microeconomics › Monopoly and price discrimination › Lerner index and monopoly powerHardabout 3 min

JNU SIS 2017 Question 26: Monopoly and price discrimination

Let the demand function faced by a monopolist be q=kp−2q = kp^{-2}q=kp−2, where qqq is quantity, ppp is price and kkk is a positive constant. The marginal cost of production is constant and equal to 3. The profit maximizing price and Lerner index, respectively, are

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Let the demand function faced by a monopolist be q = kp⁻², where q is quantity, p is price and k is a positive constant. The marginal cost of production is constant and equal to 3. The profit maximizing price and Lerner index, respectively, are (A) (3, 2) (B) (6, 1/2) (C) (6, 2) (D) (5, 3)

Also written as: Let the demand function faced by a monopolist be q = kp^(-2), where q is quantity, p is price and k is a positive constant. The marginal cost of production is constant and equal to 3. The profit maximizing price and Lerner index, respectively, are

Monopoly and price discrimination has come up 128 times in 7 exams since 2004.

What this question tests

This question is on Lerner index and monopoly power, part of Monopoly and price discrimination in Microeconomics.

The mark-up of price over marginal cost and its link to the elasticity of demand.

TestStop has 12 past-paper questions on this subtopic; the nearest in year are below.

  • IIT JAM 2022 · Q40A monopolist faces demand Q = P^e, where e is the price elasticity of demand (e < -1), and Marginal Cost =…
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Question from the JNU SIS 2017 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.