How to use this app?
The Monopolist's pricing rule: price elasticity and mark-up
The Monopolist's pricing rule: price elasticity and mark-up
Welcome! Consider you run a company which holds a monopoly on some market. You have information about consumers (you are aware of demand price-elasticity e. You are also aware of your marginal cost c.
This app computes the price, the markup ratio and the Lerner Index if you maximize profit. Input marginal cost and price elasticity in the left panel. The `Optimal price` tab shows the resulting price. Check the result using the `Lerner Index & Markup` tab.