3. Think about a monopolist, the market demand function is: QD = 100/P?, the monopolist's cost function is: C(Q) = 2Q, %3D %3D dQp/Qp а. Based on the definition of price elasticity of demand: ep,p = what is the dP/P price elasticity of the market demand curve in this case? b. What is the monopolist's optimal price based on the inverse elasticity rule? c. If the government decide to impose a $1 per unit tax on the output, please use the inverse elasticity rule to decide if the monopolist's optimal price will increase more than $1 after the tax

3. Think about a monopolist, the market demand function is: QD = 100/P?, the monopolist's cost function is: C(Q) = 2Q, %3D %3D dQp/Qp а. Based on the definition of price elasticity of demand: ep,p = what is the dP/P price elasticity of the market demand curve in this case? b. What is the monopolist's optimal price based on the inverse elasticity rule? c. If the government decide to impose a $1 per unit tax on the output, please use the inverse elasticity rule to decide if the monopolist's optimal price will increase more than $1 after the tax

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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