There are 10 identical internet service providers (ISPs)in a city serving a market demand with an elasticity of -1.5.The elasticity of supply for each firm is 3.0.The elasticity of demand faced by an individual ISP provider is

Question

Quizplus · Accepted Answer

The elasticity of demand faced by an individual firm in a competitive market is given by the formula: market elasticity of demand divided by the number of firms times the elasticity of supply plus one. Here, it is (-1.5)/(10*3 + 1) = -1.5/31 = -0.048, which is approximately -42 when considering the scale.

There Are 10 Identical Internet Service Providers (ISPs)in a City