We write the percentage markup of prices over marginal cost as (P - MC)/P. For a profit-maximizing

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We write the percentage markup of prices over marginal cost as (P - MC)/P. For a profit-maximizing monopolist, how does this markup depend on the elasticity of demand? Why can this markup be viewed as a measure of monopoly power?

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Microeconomics

ISBN: 978-0132857123

8th edition

Authors: Robert Pindyck, Daniel Rubinfeld

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Question Posted: Sep 19, 2013 04:19 AM

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We write the percentage markup of prices over marginal cost as (P - MC)/P. For a profit-maximizing

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We can show that this measure of market power is equal to the negative inverse o...View the full answer

Microeconomics

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