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. Calculate the profit.
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.