Use first order conditions for profit maximisation

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Reference no: EM1392786

Part A: Use the first order conditions for profit maximisation to show that a monopolist will never produce on the inelastic portion of his demand curve.

Part B: "Compared with perfectly competitive markets, monopoly markets lead to inefficiency". Assume a monopoly faces the demand curve Q=120-P and has a cost function C (Q) =10+2Q (The Q is squared). Draw a clear fully labelled diagram showing monopoly profit maximisation. Calculate the quantity produced, the price, and the deadweight loss and clearly indicate them on the diagram.

Reference no: EM1392786

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