Unique Creations holds a monopoly position in the production and sale of magnometers.
The cost function facing Unique is estimated to be
TC = $100,000 + 20Q
a. What is the marginal cost for Unique?
b. If the price elasticity of demand for Unique is currently –1.5, what price should Unique charge?
c. What is the marginal revenue at the price computed in Part (b)?
d. If a competitor develops a substitute for the magnometer and the price elasticity increases to –2.25, what price should Unique charge?