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Question: The price elasticity of demand for a textbook sold in the United States is estimated to be -2.0, whereas the price elasticity of demand for books sold overseas is - 3.0. The U.S. market requires hardcover books with a marginal cost of $7; the overseas market is normally served with soft cover texts, having a marginal cost of only $5. Calculate the profit-maximizing price in each market. (Hint: Remember that MR = P (1 + 1/e)
There are four essay questions for this final examination. Answers of at a least a full page are required for each and are to be presented in APA format.
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2. At a price of $9.50/pound, people buy 45 pounds of lamb. At a price of $10.50/pound, people buy 35 pounds of lamb. What is the arc elasticity of demand for lamb in this price range?
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