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

Quizplus · Accepted Answer

The elasticity of demand is 1 when the percentage change in quantity demanded is equal to the percentage change in price. In this case, the price increases from $9 to $10, and the quantity demanded decreases from 11 to 10. The percentage change in price is (10 - 9) / 9 = 0.111, and the percentage change in quantity demanded is (10 - 11) / 11 = -0.091. Therefore, the elasticity of demand is -0.091 / 0.111 = -0.82, which is less than 1.

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