We write the percentage markup of price over marginal cost as P-MC P . Fora prot-maximizing monopolist, how does this markup depend on the elasticity of demand? Why can this markup be viewed as a measure of monopoly power? Market power is the ability to charge a price '3 marginal cost. For the protmaximizing monopolist, {1A P-MC P = - ED will hold. implying that as the price elasticity of demand increases, market power decreases. {he P-MC 1 P = - E will hold, implying that as the price elasticity of demand increases, market power decreases. D {no P-MC P = - ED will hold. implying that as the price elasticity of demand decreases, market power decreases. fpu P-MC 1 P = - E will hold, implying that as the price elasticity of demand decreases, market power decreases. D