ISI eco doubt

[SoniaKapoor]

A monopolist has contracted with the government to sell as much of
its output as it likes to the government at Rs. 100/- per unit. Its sales
to the government are positive, and it also sells its output to buyers
at Rs. 150/- per unit. What is the price elasticity of demand for the
monopolists services in the private market?

[Dreyfus]

M getting -3

[kangkan]

I am also getting -3

[SoniaKapoor]

@vaibhav @ kangkan
please help me with the solution..

[kangkan]

..see the mono is ready to supply infinite amt at rs 100..therefore Marginal cost=100...

For the monoploy market,we know that the mono will supply at a point such that p(1-1/e)=mc

now put p=15o and mc=100..we get e=-3

[kangkan]

if price is fixed it most profitable to supply till p=mc...

[SoniaKapoor]

Thanxx kangkan..i was geting confused with MC.