Price elasticity of demand, Microeconomics

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Problem:

(a) Given TR = P×Q,

Show that  2251_illustrate the relationship between price elasticity and marginal revenue.png

Note: TR is total revenue, P refers to price, Q refers to quantity demanded, MR denotes marginal revenue, and εd shows the price elasticity of demand.

(ii) Referring to part (i), diagrammatically illustrate the relationship between price elasticity, marginal revenue, and total revenue.

(b) Using indifference curve analysis, explain the backward bending labour supply curve.

(c) "Monopoly is desirable in industries marked with significant economies of scale". Critically discuss.


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