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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