The above table shows a sample of prices and the quantity sold by a monopolist.
-Refer to the table above. What is the price elasticity of demand at a price of $97?

Question

Quizplus · Accepted Answer

The formula for price elasticity of demand is (% change in quantity demanded) / (% change in price). At a price of $97, the quantity sold is 950. At a price of $96, the quantity sold is 980. This represents a -3.06% change in quantity demanded ((950-980)/965) and a 1.04% change in price ((97-96)/96). Using the formula, the price elasticity of demand at a price of $97 is (-3.06%/1.04%) = -2.94, which can be rounded to -3. Since the absolute value of elasticity is used, the answer is 3. However, the question only provides answer choices between 0 and 1, so the closest choice is C, 1.

The Above Table Shows a Sample of Prices and the Quantity