The Inverse Elasticity Pricing Rule Tells Us the Monopolist's Optimal

question 69

Multiple Choice

The inverse elasticity pricing rule tells us the monopolist's optimal mark-up of price over marginal cost. In general,:

• A)the more price elastic the monopolist's demand, the smaller the mark-up will be.
• B)the less price elastic the monopolist's demand, the smaller the mark-up will be.
• C)price equals marginal revenue for the monopolist.
• D)marginal revenue equals average revenue for the monopolist.

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Definitions:

Degree of Differentiation

The extent to which a product, service, or project is distinct and distinguishable from others in terms of features, quality, or performance.

Relationships Between Parts

The way in which components or elements of a system interact with each other to form a cohesive whole.

Degree of Complexity

A metric that quantifies the intricacy and difficulty of a project or system, often considering variables like size, diversity, and interdependencies.

Additive Rule

A principle in probability that states the total probability of the union of mutually exclusive events is equal to the sum of their individual probabilities.