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Please Help Me With Ap Microeconomics

  1. May 14, 2008 #1
    I'm stuck, and I can't understand please help me.
    Here is the graph in my book.

    Now the thing is this:
    For a monopoly
    When MR (marginal revenue) is >0, then the demand is elastic.
    When MR is 0, the demand is unit elastic.
    When MR is <0 (below the x-axis), the demand is inelastic.
    Usually when a monopoly is maximizing profits, it is operating on the elastic part of the demand curve.
    Now this curve is a graph of a monopoly engaged in price discrimination.
    It is charging different prices from buyers with different demand elasticities.

    My problem:
    The graph says that the Demand is Relatively Inelastic.
    However, the place where Marginal Cost (MC) = MR, is at quantity Q and price P.
    This is the elastic part of the demand curve, so the demand is elastic.

    Then how is this relatively Inelastic

    Please help!
    Last edited: May 14, 2008
  2. jcsd
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