We write the percentage markup of prices over marginal cost as (P - MC)/P. For a profit-maximizing monopolist, how does this markup depend on the elasticity of demand? Why can this markup be viewed as a measure of monopoly power?

We can show that this measure of market power is equal to the negative inverse of the price elasticity of demand.

The equation implies that, as the elasticity increases (demand becomes more elastic), the inverse of elasticity decreases and the measure of market power decreases.  Therefore, as elasticity increases (decreases), the firm has less (more) power to increase price above marginal cost.