Problem
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.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.