Trisha Has a Monopoly on Formal Gowns in the Local

question 103

Essay

Trisha has a monopoly on formal gowns in the local market. She is currently charging $250 per gown and sells 20 in a month. The elasticity of demand is -1.5 at this price and output level. What must be Trisha's marginal cost of the last gown produced if she is maximizing profits?

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Definitions:

Substitute Goods

Products or services that can be used in place of each other, where an increase in the price of one leads to an increase in demand for the other.

Demand

Demand refers to the quantity of a product or service that consumers are willing and able to purchase at various prices during a given period.

Price Decrease

A reduction in the cost that buyers must pay for a good or service.

Normal Good

A type of good for which demand increases when income increases, and falls when income decreases.