If the Inverse Demand Function for a Monopoly's Product Is

question 131

Multiple Choice

If the inverse demand function for a monopoly's product is p = a - bQ,then the firm's marginal revenue function is

• A) a.
• B) a - (1/2)bQ.
• C) a - bQ.
• D) a - 2bQ.

Understand the concept of price elasticity of demand and its calculation using different methods.

Identify factors affecting price elasticity of demand including time horizon, availability of close substitutes, definition of the market, and whether a good is a necessity or a luxury.

Analyze the effect of price changes on quantity demanded using the concept of elasticity.

Determine the relationship between price elasticity and total revenue.

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