Question: A market has a demand function: D (p) = B p, (1) where , B> 0 1. Calculate the price elasticity. 2. At what demand

A market has a demand function: D (p) = B p, (1) where , B> 0 1. Calculate the price elasticity. 2. At what demand is the price elasticity 1. 3. A company has production costs c p is unit and faces this demand function. It may set the price under the condition of ing 1. What is the optimal price? Is (the absolute worthy) of the price elasticity higher or lower than 1 in the optimal price? How the optimal depends price of ? What happens when is high? Explain in words why?

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