Suppose a​ monopoly's price is 

​$180.00180.00 

and its marginal cost of production is 

​$108.00108.00.

What is the​ firm's elasticity of​ demand?

The​ monopoly's price elasticity of demand is 

epsilonεequals=enter your response here.

To find the firm's price elasticity of demand (ε) in a monopoly, we use the formula for the monopoly's elasticity of demand in terms of price and marginal cost:

\[
\epsilon = \frac{P}{P - MC}
\]

Where:
- $ P $ is the price of the good (in this case, $180.00),
- $ MC $ is the marginal cost (in this case, $108.00).

Let's calculate:

\[
\epsilon = \frac{180}{180 - 108} = \frac{180}{72} = 2.5
\]

So, the monopoly's price elasticity of demand is $ \epsilon = 2.5 $.

This means the demand is elastic; for every 1% change in price, the quantity demanded changes by 2.5%.

Would you like more details or have any questions?

Here are five related questions:
1. How does elasticity of demand affect a monopolist's pricing strategy?
2. What is the relationship between marginal revenue and elasticity in a monopoly?
3. How would an increase in marginal cost affect the monopoly’s price elasticity of demand?
4. What does it mean if a monopoly's elasticity of demand is less than 1?
5. How can a monopoly maximize its profit based on elasticity?

**Tip:** In a monopoly, the price elasticity of demand plays a crucial role in determining optimal pricing for maximum profit. The more elastic the demand, the more sensitive consumers are to price changes.

Suppose a monopoly's price is $180.00 and its marginal cost of production is $108.00. What is the firm's elasticity of demand? The monopoly's price elasticity of demand is ε = enter your response here.

Learn how to calculate the price elasticity of demand for a monopoly with a price of $180.00 and a marginal cost of $108.00. This detailed solution uses the elasticity formula ε = P / (P - MC) and is suitable for college-level economics or math students.

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