Pricing with Zero Marginal Cost. Consider a monopolist who owns a natural spring that produces water? that, according to nearby? residents, has a unique taste and healing properties. The monopolist has a fixed cost of installing plumbing to tap the water but no marginal cost. The demand curve for the spring water is linear.
?1.) Use the line drawing tool to draw a demand line that touches both axes. Properly label this line.
?2.) Use the line drawing tool to draw a corresponding marginal revenue line that touches both axes. Properly label this line.
?3.) Use the line drawing tool to draw the marginal cost function consistent with the above description of these costs. Properly label this line.
?4.) Use the point drawing tool to identify the? profit-maximizing price and quantity. Label this point? 'a'.
Carefully follow the instructions? above, and only draw the required objects.
At the? profit-maximizing quantity, what is the price elasticity of? demand? nothing
?(Enter your response an an integer and include the minus? sign.)