Profit maximization for the monopolist occurs where P=MC/(1+(1/Ed));

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    If the firms Ed (price elasticity of demand) is large, the mark up over marginal cost will be small and the firm has little market power..
     If the firms Ed (price elasticity of demand) is large, the mark up over marginal cost will be large and the firm has a great degree of market power..
     If the firms Ed (price elasticity of demand) is small, the mark up over marginal cost will be small and the firm has a great degree of market power..
     If the firms Ed (price elasticity of demand) is small, the mark up over marginal cost will be large and the firm has a low degree of market power..
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

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If the firms Ed (price elasticity of demand) is large, the mark up over marginal cost will be small and the firm has little market power..
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)



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