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What is the price elasticity of demand

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Reference no: EM132410810

For question 1, assume that a firm is maximizing profits.

1a. If the price is $10 and marginal revenue is $6, what is the price elasticity of demand? 

1b. If the price is $10 and the price elasticity is five, what is marginal revenue? 

1c. If marginal revenue is $8 and the price elasticity of demand is two, what is the price?

2. Under a two-part tariff, consumers are worse off but the market is more efficient. True or false?

3. "It never pays a monopolist to sell at a low price in one market when he or she can get a higher price in another market." Evaluate this statement. 

4. Why is price discrimination more common in service industries than in manufacturing industries?

5. For a monopoly that would find it most profitable to shutdown, can price discrimination make it desirable for the monopoly to remain in business?

6. For a monopoly that practices first-degree price discrimination, how would a one dollar per-unit tax affect the monopoly's output, consumer surplus, producer surplus, and total surplus?

Reference no: EM132410810

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