Destiny cable has market power in the cable television market in particular locality. The demand curve for Destiny's outputis Qp=10-0.4PP=25 -2.50 Destiny's marginal revenue function is MR(Q)=25-5Q. Destiny's marginal cost curve is MC(Q) = 0.53+0.026Q. a) Determine Destiny's profit maximizing price. b) Calculate Destiny's elasticity of demand at this price. Is demand for cable TV elastic, inelastic or unit elastic?
c) Given the computed elasticity of dem and, if Destiny wants to maximize profit, shouldit increase, decrease, or leave unchanged its current price? Why?