Suppose a monopolist has TC = 40 + 10Q + Q2, and the demand curve ...

[sheilaspns]

Suppose a monopolist has TC = 40 + 10Q + Q2, and the demand curve it faces is p = 130 - 2Q. What is the Lerner index of this profit-maximizing monopolist?
 
  A) 0.222
  B) 0.35
  C) 0.444
  D) 0.50

Question 2

If a firm goes out of business because of negative economic profits, its books
 
  A) might indicate a positive accounting profit.
  B) might indicate that opportunity costs were zero.
  C) might indicate that taxes are too high.
  D) might suggest a mistaken value of explicit costs.

[pratush dev]

Answer to Question 1

C

Answer to Question 2

A