b. Recalling that a straight-line demand curve has an
associated MR curve that has twice its slope, plot the two
MR curves.
c. Suppose Levi Strauss has a constant marginal cost of $15
per unit. Plot the MC curve in both diagrams.
d. What is the profit-maximizing price in each market?
Explain why profit maximization requires that MC be
equated to MR in each market segment.
e. Compute the price elasticity of demand (at the profit-
maximizing points) in each market segment. (You may
want to review Chapter 4 on elasticity at this point.)
Does the market segment with less elastic demand have
the higher price?