The manager of a local monopoly estimates that the elasticity of demand for its product is constant and equal to −2. The firm’s marginal cost is constant at $25 per unit.
a. Express the firm’s marginal revenue as a function of its price.
Instructions: Enter your response rounded to two decimal places.
MR =
× P
b. Determine the profit-maximizing price.
Instructions: Use the rounded value calculated above and round your response to two decimal places.
$
Answers: 1
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The manager of a local monopoly estimates that the elasticity of demand for its product is constant...
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