7.Suppose that a firm faces a demand curve that has a constant elasticity of -2. This demand...
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7.Suppose that a firm faces a demand curve that has a constant elasticity of -2. This demand curve is given by
Suppose also that the firm has a marginal cost curve of the form MC =0.001q
a. Graph these demand and marginal cost curves.
b. Calculate the marginal revenue curve associated with the demand curve; graph this curve. (Hint: use Equation 8.9 for this part of the problem.)
c. At what output level does marginal revenue equal marginal cost?
Related Book For
Intermediate Microeconomics and Its Application
ISBN: 978-0324599107
11th edition
Authors: walter nicholson, christopher snyder
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