Suppose that the total cost curve for a monopolist is provided by TC = 3y2 + 800 and its marginal cost curve is given as MC = 6y. Also assume it faces a market demand curve of py = 280 - 4y and marginal revenue curve of MR = 280 – 8y.
a. Find out the monopolist’s profit maximizing price and quantity and it’s economic profits.
b. Find out the price elasticity of demand at the profit maximizing price.