Figure: Monopolist 5
In these figures, the markup of price over marginal cost for the relatively inelastic demand is ______, and the markup of price over marginal cost for the relatively elastic demand is ______.
A) $10; $2
B) $15; $7.50
C) $7.50; $3
D) $5; $1

Question

Figure: Monopolist 5  
In these figures, the markup of price over marginal cost for the relatively inelastic demand is ______, and the markup of price over marginal cost for the relatively elastic demand is ______.
A) $10; $2 
B) $15; $7.50 
C) $7.50; $3 
D) $5; $1

Quizplus · Accepted Answer

Based on the diagrams, we can see that for the relatively inelastic demand curve, the markup of price over marginal cost is $7.50. For the relatively elastic demand curve, the markup of price over marginal cost is $3. Therefore, the best choice is C, which matches these values.