Firm W is a monopolist that faces market demand with elasticity equal to -2, and Firm...

Question

Question

business economics

Answer 1

Answer #1

As per the Lerner Index formula,

(P-MC)/P = 1/|E|

(48-MC)/48 = 1/2

48-MC = 24

MC = $24

So, marginal cost per unit is $24.

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Answer 2

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