If the demand elasticity for the monopolist's product is equal to -2 and marginal revenue is 10, what is the profit-maximizing price?
A)$20
B)$10
C)$0.50
D)$5

Name: If the demand elasticity for the monopolist's product is equal to -2 and marginal revenue is 10, what is the profit-maximizing price? A)$20 B)$10 C)$0.50 D)$5
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Question

Quizplus · Accepted Answer

The formula for marginal revenue (MR) in a monopoly is MR = P(1 + 1/E), where E is the price elasticity of demand. Given MR = 10 and E = -2, solving for P gives P = 20.

If the Demand Elasticity for the Monopolist's Product Is Equal