The Inverse Elasticity Pricing Rule Says That the Optimal Markup

question 4

Multiple Choice

The inverse elasticity pricing rule says that the optimal markup of price over marginal cost expressed as a percentage of price:

• A)is equal to ½ the inverse of the price elasticity of demand.
• B)is equal to - ½.
• C)is equal to the negative of the inverse of the price elasticity of demand.
• D)is equal to the inverse of the price elasticity of demand.

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