Identify the Truthfulness of the Following Statements

question 63

Multiple Choice

Identify the truthfulness of the following statements.
I. IEPR states that the monopolist's optimal markup of price above marginal cost can be expressed as follows: the monopolist's optimal markup, expressed as a percentage of price, is equal to minus the inverse of the price elasticity of demand.
II. IEPR tells us that the price elasticity of demand plays a vital role in determining what price a monopolist should charge to maximize profits.

• A) I and II are true.
• B) I and II are false.
• C) I is true; II is false.
• D) II is true; I is false.

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