Firms X and firm Y are maximizing profits. At their respective profit-maximizing price, Firm X's own-price elasticity is -2 and Firm Y's own-price elasticity is -3. Which statement is correct? O The share of markup in the optimal price (Lerner inden) for firm X is equal to 50% O Firm X is a price taker O Everything else held constant, itf firm Y increases its price it will lead to an increase in its revenue O Firm X's consumers are more price sensitive than firm Y's consumers O Firm Y can charge a higher markup than firm X
Firms X and firm Y are maximizing profits. At their respective profit-maximizing price, Firm X's own-price elasticity is -2 and Firm Y's own-price elasticity is -3. Which statement is correct? O The share of markup in the optimal price (Lerner inden) for firm X is equal to 50% O Firm X is a price taker O Everything else held constant, itf firm Y increases its price it will lead to an increase in its revenue O Firm X's consumers are more price sensitive than firm Y's consumers O Firm Y can charge a higher markup than firm X
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter9: Monopoly
Section: Chapter Questions
Problem 3SCQ: Suppose the local electrical utility, a legal monopoly based on economies of scale, was split into...
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