A monopoly barber sells haircuts to adults for $30 and to children for $10. Let represent
Question:
A monopoly barber sells haircuts to adults for $30 and to children for $10. Let ηΑ represent adults’ elasticity of demand for haircuts and let ηC represent children’s elasticity of demand.
a. Explain why |ηΑ| and |ηC| must both be greater than 1.
b. Find a formula for ηA in terms of ηC.
c. What is the largest possible value for |ηΑ|?
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a If either were less than 1 the monop...View the full answer
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