Please use typing instead of handwriting. Please write clearly if you cannot type. Thank you!

Suppose that econometricians at Hallmark Cards determine that the price elasticity of de mand for greeting cards is 2. (a) If Hallmark's marginal cost of producing cards is constant and equal to $1.00, use the Lerner index P MG _ 1 P _ _ to determine what price Hallmark should charge to maximize prot. (b) Hallmark hires you to estimate the price elasticity of demand faced by its archrival, American Greetings. Hallmark estimates that American's marginal cost of producing a greeting card is $1.08. You note that American's cards sell for an average of $3.24. Assuming that American Greetings is maximizing prot, calculate their price elasticity of demand