43. If the demand function for a monopoly\'s product is Q = 50-0.5p, then the fi

Question

43. If the demand function for a monopoly's product is Q = 50-0.5p, then the firm's marginal revenue function is a. b. c. d. 50-. 100 -4Q 200- 4Q. 200 - 2Q. 44. If the inverse demand curve a monopoly faces is p = 100-2Q, and MC is constant at 16, then profit maximization is achieved when the monopoly sets price equal to a. 16. b. 21. C. 25. d. 58. 45. If the inverse demand curve a monopoly faces is p = 100-2Q, and MC is constant at 16, then the firm's Lerner Index equals a. 58/16. b. 16/42. c. 58/42. d. 42/58. 46. If the inverse demand curve a monopoly faces is p = 100-2Q, and MC is constant at 16, then the deadweight loss from monopoly equals a. $21. b. $441. c. $882. d. $1,764.

Explanation / Answer

43) P = 100 - 2Q

MR = d(PQ)/dQ = 100 - 4Q

44) Profit is maximized when MR = MC

100 - 4Q = 16

Q = 21 and P = 58

45) Lerner index = (P - MC)/P = (58-16)/58 = 42/58

46) DWL = (P - MR) x (Qc - Qm) x 0.5

P = 58, MR = 16 , Qm = 21

100 - 2Qc = 16 (when P = MC)

Qc = 42

DWL = 42 x 21 x 0.5 = $ 441

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