If the demand curve facing a monopoly was 1 unit at $7,2 units at $6,3 units at $5,4 units at $4,and 5 units at $3,at the point along the curve where 3 units are being sold,the elasticity of demand:
A) is greater than one.
B) is equal to one.
C) is less than one.
D) cannot be determined from the above information.

Question

Quizplus · Accepted Answer

The elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Between 2 units at $6 and 3 units at $5, the percentage change in quantity is 50% (from 2 to 3), and the percentage change in price is approximately -16.67% (from $6 to $5). The elasticity is greater than one, indicating elastic demand.

If the Demand Curve Facing a Monopoly Was 1 Unit