The monopolist faces a demand curve given by . Its cost function is . What are the optimal level of output and price?
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0 marksMicroeconomicsMonopoly and price discriminationLerner index and monopoly powerModerateabout 2 min
JNU SIS 2021 Question 14: Monopoly and price discrimination
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The monopolist faces a demand curve given by D(p) = 10p⁻³. Its cost function is c(q) = 2q. What are the optimal level of output and price? (A) q = 10, p = 2 (B) q = 10⁻³, p = 10^(4/3) (C) q = 10 x (3⁻³), p = 3 (D) q = 50, p = 2
Also written as: The monopolist faces a demand curve given by D(p) = 10p^(-3). Its cost function is c(q) = 2q. What are the optimal level of output and price?
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.
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