in the earlier recording we have seen that the monopolis is going to function at the elastic portion of the demand Cup this is what we have seen he will never produce at the inelastic portion but he's going to make more money if he's going to face relatively inelastic demand C right so let me just write these points while the monopolist reduces at the elastic portion of the demand C this is what we have seen in the last recording right he is going to make more money if he is going to be facing the relatively inelastic demand C because if he's going to face relatively inelastic demand cve it means that the product has less substitutes which are available and people will be willing to pay higher price to them right so monopolist it can charge larger margin so when I say larger margin it means how far I can set the price above the cost that is what is meant by the larger margin when facing a relatively inelastic demand in elastic demand C so when the consumers sorry when the monopolis is going to face a relatively inelastic demand curve it means that U consumers do not have many substitutes which are available and because consumers do not have many substitutes which are available so consumers will will be willing to pay even higher price for the monopolis product right so then when the consumer sorry then when facing relatively elastic demarker right right so beta you have already seen this in the last class that uh at equilibrium McQ is equal to mrq you've seen this and you have also seen this that marginal revenue it could be written as p is a function of Q Plus d p is a function of Q by Del Q into Q let me just show this I mean we have also derived it earlier right in one or two classes behind I think so you can just have a look at this so this is what we have derived earlier right so if you have not seen this please go to the previous recordings and uh we have shown this right this is let's say what C is or MC is McQ right fair enough so what I can do is I can take up this thing common and I'll be getting 1+ d p is a function of Q upon d q into Q by P is a function of Q like this right well well this guy is nothing but the inverse of elasticity what is the formula for elasticity of demand d q by DP into P by q that is the formula so what about one upon elasticity of demand DP by DQ into Q by that's what you have written one upon elasticity into one right well this is what the McQ is this is what the McQ is fair enough I can just open this up also is a function of Q MH like this and I can write it like minus P upon 1 upon elasticity of demand this is let's say p minus MC B minus MC so I'll be left out with minus 1 upon elasticity of demand is equal to P minus MC upon p p minus MC upon p so this is what my relative markup is so proportionately how far I'm able to set the price above the marginal cost this is what the learner index is this is what the learner index is so it is the monopolist's ability ability set the price above marginal to set the price above marginal cost so this is also called the markup and why it is called the markup it is called because it is uh uh giving you an opportunity to set the price above the cost it's a markup over the cost right markup over the cost so say for example say elasticity of demand is min -4 right elasticity of demand is minus 4 so it is relatively elastic so it is uh so what is your P minus MC upon P 1 upon 4 right so your power to set the price relatively above the Marin cost is just 1x4 if the demand is relatively inelastic minus 1 upon 4 so it is relatively inelastic this is elastic H so it is- 1 upon - 1 upon 4 so that comes out to be four so monopolists ability to set the price above the cost is more in the inelastic demand C or in the inelastic Market relative to the elastic market so this is elastic now so modulus of Ed is four so this is greater than one this is elastic here modulus of Ed is 1x4 it is less than one it is inelastic so monopolist has more power to set the price above the cost in case if he's facing the relatively inelastic demand cve relatively inelastic Demand cve right so I mean in in percentage terms also you can say that in case of elastic demand curve his power is to set the price just 25% more above the cost but in case of this guy your uh your uh inelastic demand cve his power is to set the price 400% above the cost right so this is what I wanted to do in this class thank you bet