# Calculate the elasticit

1. Feb 15, 2010

### econ67

1. The problem statement, all variables and given/known data

A monopolist faces demand y=96-4p and has total costs c=10y.
a) derive the marginal cost and marginal revenue functions.
b) what is the profit-maximizing output and price for this monopolist?
c) Suppose p=10 and MR=5, calculate the elasticit.

Any feedback would be greatly appreciated.

2. Relevant equations

3. The attempt at a solution

2. Feb 16, 2010

### danago

Re: Economics

Do you know the definition of marginal cost and marginal revenue?

3. Feb 16, 2010

### econ67

Re: Economics

I have an idea of what they mean, but im having a hard time finding them for this problem.

4. Feb 16, 2010

### vela

Staff Emeritus
Re: Economics

So what do they mean? Show us what attempts have you made to figure them out.

5. Feb 16, 2010

### econ67

Re: Economics

What i did to find the marginal revenue was divide the derivative of the total revenue by the derivative of the quantity function. d(96p-4p^2)/d(96-4p)=96-4p/-4=-24+p. Thats what i got for the marginal revenue.

For the marginal cost, i divided the derivative of the cost function by the derivative of the quantity function. 10/-4 was the result i got for the marginal cost function.

6. Feb 16, 2010

### vela

Staff Emeritus
Re: Economics

Can you state in words what marginal cost is and what marginal revenue is? I can't tell if you don't have a clear concept of what those quantities are or if you just don't know how to represent them mathematically.