Consider a monopolist in the market for designer sneakers. The market demand curve is given by P = 600 - 3Q. The firm's current price is $200 and the rm sells 50 units of output.
a. Use the monopolist markup formula to calculate marginal revenue at the current price/quantity.
b. If the firm's marginal cost is zero, is the firm maximizing profits? If Yes, justify your answer. If No, explain whether the firm should increase or decrease output.