A monopoly with a constant marginal cost m has a profit-maximizing price of p1. It faces a constant elasticity demand curve with elasticity ε. After the government applies a specific tax of $1, its price is p2. What is the price change p2 - p1 in terms of ε?

How much does the price rise if the demand elasticity is -2? (Hint: Use Equation 11.10.) M