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(a) The profit-maximizing quantity of a monopolist facing a downward-sloping demand curve must be produced at a point where the demand is elastic (meaning the demand elasticity with respect to price e< -1)

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(a) The profit-maximizing quantity of a monopolist facing a downward-sloping demand curve must be produced at a point where the demand is elastic (meaning the demand elasticity with respect to price e< -1). True or false? Why?

(b) A monopolist can sell its product in two separate markets. Market 1’s price elasticity of demand is e₁ = −2. Market 2’s price elasticity of demand is e₂ = −4. Assume that the monopolist has a constant marginal cost of 10. Determine the prices in these markets that give the monopolist the largest profits