Question

Suppose a monopoly's price elasticity of demand equals -2 and the marginal cost of production equals $300.00. The profit-maximizing price is ___________$ (Enter a numeric response using a real number rounded to two decimal places) What will be the firm's markup? When maximizing profit the monopoly's markup is _________ percent(Round your response to the nearest percent)

Answer 1

Answer:

profit-maximizing price= 600

makeup percentage= 100%

Explanation:

looking at the question and solving it and getting the profit-maximizing price , then we have;

Monopoly optimal price=MC/(1-1/ed)

=300/1-1/2

=600

the makeup percentage=

markup=P-MC/MC*100

markup=600-300/300*100=100%