Scenario: When a monopolist charges $5 for its product, it sells 250 units of the product. When it decreases the price of the product to $4, it sells 325 units of the product.
-Refer to the scenario above.Which of the following is true of the demand curve for the product in the price range $4 to $5?
A) The demand curve is elastic.
B) The demand curve is inelastic.
C) The demand curve is horizontal.
D) The demand curve is upward sloping.

Question

Quizplus · Accepted Answer

The decrease in price from $5 to $4 led to a significant increase in quantity demanded from 250 to 325, indicating that consumers are very responsive or sensitive to price changes in this price range. This means that the demand curve is elastic, meaning that a small change in price leads to a relatively larger change in quantity demanded.

Scenario: When a Monopolist Charges $5 for Its Product, It