Suppose a monopolist faces the constant price elasticity demand curve: p = Q^ε where ε -1,what is the price and quantity the monopolist will set?

Question

Suppose a monopolist faces the constant price elasticity demand curve:
p = Q^ε
where ε < 0.The monopolist has a constant marginal cost of c.
a.If ε < -1,can you determine what price and quantity will the monopolist set? Explain.
b.If 0 > ε > -1,what is the price and quantity the monopolist will set?

Quizplus · Accepted Answer

The Answer of Suppose a monopolist faces the constant price elasticity demand curve: p = Q^ε where ε < 0.The monopolist has a constant marginal cost of c. a.If ε < -1,can you determine what price and quantity will the monopolist set? Explain. b.If 0 > ε > -1,what is the price and quantity the monopolist will set?

Suppose a Monopolist Faces the Constant Price Elasticity Demand Curve