3. Price Searcher Facing a Constant Elasticity Demand Curve Consider a price searcher selling at a single market where the demand is given by = , where > 1. Suppose the firm has a constant marginal cost of .

a. Calculate the demand elasticity, and write down the marginal revenue function as a function of price.

b. Using your above calculation, find the price charged by the price searcher as a function of .

c. What happens to the price searcher's price when increases? Interpret your result.

d. What happens to the price searcher's price as approaches 1? Explain.

e. What is the price searcher's profit-maximizing output?