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Economics

The owner of a monopoly firm which produces and sells computers hires you as the manager of the firm. He asks your opinion on how much to mark up the price over marginal cost (MC) given that the firm's objective is to maximize its profits. The only information that the owner provides you is the magnitude of the price elasticity of the demand for its computers which is (-8). How much do you recommend this firm to mark up (MUP) its price relative to its MC? (i.e., calculate MUP=[(P-MC)/MC]. Please show your calculation and formulas to support your recommendation.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91949846

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