Consider a monopolist with production cost function 40 + 20x, where x is the amount produced. Let D(p) = 50 - p/2 be the demand-price relationship.
1. What is the elasticity of demand at the price p = 20.
2. At the price p = 44, if the monopolist wishes to raise revenue, should he raise or lower the price?
3. What is the monopolist’s maximum profit?
4. What is the elasticity of demand at the profit maximizing price?