Question: Assume that a monopolist sells a product with a total cost function TC = 1,200 + 0.5Q2 and a corresponding marginal cost function MC = Q. The market demand curve is given by the equation P = 300 - Q.
a). Find the profit-maximizing output and price for this monopolist. Is the monopolist profitable?
b). Calculate the price elasticity of demand at the monopolist's profit-maximizing price. Also calculate the marginal cost at the monopolist's profit-maximizing output. Verify that the IEPR holds.