A Monopoly Produces Widgets at a Marginal Cost of $10

question 49

Multiple Choice

A monopoly produces widgets at a marginal cost of $10 per unit and zero fixed costs.It faces an inverse demand function given by P = 50 − Q.The demand elasticity of a widget at the monopoly price and quantity is:

• A) −1.5.
• B) −2.
• C) −2.5.
• D) 2.

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