FIGURE 4- 2
-Refer to Figure 4- 2. In part 1 of the figure, the elasticity of demand for prices below $10 is
A) 0.
B) less than 1.
C) 1.
D) greater than 1.
E) infinity.

Question

FIGURE 4- 2
-Refer to Figure 4- 2. In part 1 of the figure, the elasticity of demand for prices below $10 is
A) 0. 
B) less than 1. 
C) 1. 
D) greater than 1. 
E) infinity.

Quizplus · Accepted Answer

The elasticity of demand is less than 1 when the percentage change in quantity demanded is less than the percentage change in price. In this case, when the price decreases from $12 to $10, the quantity demanded increases from 4 to 6. The percentage change in quantity demanded is 50%, while the percentage change in price is 16.67%. Therefore, the elasticity of demand is less than 1.

FIGURE 4- 2 -Refer to Figure 4- 2. in Part 1 of the 1