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Looking first at a ppm, equating MR and MC (second-order conditions are ignored) implies the firm sets a price that is a multiple of the MC of its optimal output; more specifically, the firm's optimal price is equal to the MC of its optimal output multiplied by an expression equal to: the absolute value of the price elasticity of demand at its optimal output divided by that absolute value minus 1. The government will continue to be the key end user group for the satellite mobile industry, since expensive terminal equipment, specifically in antenna systems can only be procured by a customer base that has a high price elasticity of demand. Affordability of value-added VPN services particularly in the SME and SoHo sectors, which have lower price elasticity of demand, will be a key benchmark in the buying decisions of many enterprises. |
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