Question: ( 20 points ) Consider a monopolist facing a constant elasticity demand curve () = 3 a) Assume that the total cost function is ()

(20 points) Consider a monopolist facing a constant elasticity demand curve () = 3

a) Assume that the total cost function is () = 5 + 4. Use the inverse elasticity pricing rule (IEPR) to obtain the profit maximizing price that this monopolist should charge.

b) How would the monopolist's profit maximizing price change if parameter increases? Answer this question by finding /. Interpret your answer

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