I am having trouble understanding how to calculate the optimal price P for a good and understand the optimal price elasticity of demand in the following condition:
- The firm is a monopoly seeking to maximise profit.
- It also has a zero marginal cost (MR = 0).
- The firm can only produce/sell an upper limit/number of the good (I am not sure if this changes anything in the analysis)
I found a lot of documentation on the web regarding price elasticity, but I did not find (enough) details about the conditions described above. My understanding is that, even in the above conditions, the optimal price elasticity of demand is at unit elastic (E= -1) [is this correct?], but I have no clue how to calculate the optimal price of the good [is there any formula for it?]. Apologies if my questions is a bit broad, I am very new to this area of study and any help (or reference to a worked solution) is appreciated.