Translation:

A market has demand function:D(p) = B bp, (1)where b, B > 0 1. Calculate the price elasticity. 2. At what level of demand is the price elasticity 1. 3. A company has production costs c and faces thisdemand function. It can set the price p under the condition of Equation 1.What is the optimal price? Is (the absolute value) price elasticity higheror lower than 1 in the optimal price? How is the optimal price dependent onb? What happens when b is high? Explain in words why