Monopoly with constant marginal cost

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A monopoly with a constant marginal cost m has a profit maximizing price of p1. It faces a constant elasticity demand curve with elasticity e. After the government applies a specific tax of $1, its price is p2. What is the price change p2-p1 in terms of e? How much does the price rise if the demand elasticity is -2?

Reference no: EM131091592

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