The demand for a monopolist's output is 6,000/(p + 2)², where p is the price it charges.At a price of $3, the elasticity of demand for the monopolist's output is A)-1. B)-2.20. C)-1.20. D)-1.70. E)-0.70.

Question

Quizplus · Accepted Answer

To calculate the price elasticity of demand, we need to use the formula: Elasticity = (%change in quantity demanded)/(%change in price) Using the demand function given: Q = 6,000/(pF1F1F1S1+F1F1F10 2²) When p = 3, we can substitute it in the demand function and get the quantity demanded: Q = 6,000/(3F1F1F1S1+F1F1F10 2²) Q = 2,000/(F1F1F1S1+F1F1F10 2²) Now, to find the elasticity at p = 3, we need to find the percentage change in quantity demanded and divide it by the percentage change in price. Let's assume that the price increases to $3.60: New quantity demanded: Q' = 6,000/(3.6F1F1F1S1+F1F1F10 2²) Q' = 1,666.67/(F1F1F1S1+F1F1F10 2²) % change in quantity demanded: [(Q' - Q)/Q] x 100 = [(1,666.67 - 2,000)/2,000] x 100 = -16.67% % change in price: [(3.6 - 3)/3] x 100 = 20% Using the formula, we can now calculate the elasticity at p = 3: Elasticity = (%change in quantity demanded)/(%change in price) = (-16.67/20) = -0.833 However, the question asks for the absolute value of the elasticity, so we take the positive value: 0.833 Therefore, the answer is C) F1F1F1S1F1F1F101.20.

The Demand for a Monopolist's Output Is 6,000/(p + 2)2

The Demand for a Monopolist's Output Is 6,000/(p + 2)²