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April 19, 2014

Homework Help: Economics

Posted by Michelle on Monday, September 3, 2012 at 1:19am.

3. Suppose a firm has a constant marginal cost of $10. The current price of the product is $25, and at that price, it is estimated that the price elasticity of demand is -3.0.
a. Is the charging the optimal price for the product? Demonstrate how you know.
b. Should the price be changed? If so, how?

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