Find the values of a, q, and p that maximize the firm profit

Reference no: EM13902665

Consider a firm with monopoly power that faces the demand curve P = 100 - 3Q + 4A1/2and has the total cost function C = 4Q2+ 10Q + A

where A is the level of advertising expenditures, and P and Q are price and output.

a. Find the values of A, Q, and P that maximize the firm's profit.

b. Calculate the Lerner index, L = (P - MC)/P, for this firm at its profit-maximizing levels of A, Q, and P.

Reference no: EM13902665

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