A monopoly incurs a marginal cost of $1 for each unit produced.If the price elasticity of demand equals -2.0,the monopoly maximizes profit by charging a price of

Question

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The profit-maximizing price for a monopoly can be found using the formula P = MC / (1 + (1/E)), where P is the price, MC is the marginal cost, and E is the price elasticity of demand. Substituting the given values (MC = $1, E = -2), we get P = 1 / (1 + (1/-2)) = $2.

A Monopoly Incurs a Marginal Cost of $1 for Each