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    Calculating the optimal price in the given case

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    The manager of a local monopoly estimates that the elasticity of demand for its product is constant and equal to -2. The firm's marginal cost is constant at $15 per unit.

    a. Express the firm's marginal revenue as a function of its price.

    MR = x P

    b. Determine the profit-maximizing price.

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    Solution Summary

    Solution determines the Marginal Revenue function and profit maximizing price in the given case.