Why is the ratio of the monopolys price to its marginal cost, p/MC, larger if the demand

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Why is the ratio of the monopoly’s price to its marginal cost, p/MC, larger if the demand curve is less elastic at the optimum quantity? Can the demand curve be inelastic at that quantity?

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Managerial Economics and Strategy

ISBN: 978-0321566447

1st edition

Authors: Jeffrey M. Perloff, James A. Brander

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Question Posted: Nov 13, 2014 03:35 AM

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Why is the ratio of the monopolys price to its marginal cost, p/MC, larger if the demand

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The Lerner Index or price markup is the ratio of the difference between price and marginal cos...View the full answer

Managerial Economics and Strategy

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