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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Definitions:

Big Five

A psychological theory describing five core traits of human personality: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Dimensions of Personality

Fundamental traits or characteristics that represent the basic structure of personality, used to describe and differentiate individual personalities.

Neuroticism

A personality trait characterized by anxiety, moodiness, worry, envy, and jealousy.

Neuroticism

A personality trait involving a long-term tendency to be in a negative or anxious emotional state, one of the five major traits in the Big Five personality traits model.