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A Monopolist Faces Linear Inverse Demand P=abQP = a - b Q

Question 56

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A monopolist faces linear inverse demand P=abQP = a - b Q and constant marginal cost, cc . The term aa increases by amount Δa\Delta a . By how much does the monopolist's optimal price increase?


A) Δa\Delta a .
B) Δa/2\Delta a / 2 .
C) Δac\Delta a - c .
D) Δa/b\Delta a / b .

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