Question: consider the constantelasticity demand function q p where ...
Consider the constant-elasticity demand function Q = p^−ε, where ε > 0.
a. Solve for the inverse demand function p(Q).
b. Calculate the demand price elasticity.
c. Show that p(Q)/MR(Q) is independent of the output level Q. (Hint: Use the relationship between marginal revenue and the elasticity of demand.)