In a monopoly where the marginal revenue and price are, respectively, given by $3 and $6, the price elasticity of demand is:
A) -0.5.
B) -1.
C) -1.5.
D) -2.

Question

Quizplus · Accepted Answer

The price elasticity of demand in a monopoly is given by the formula: Elasticity = (P - MR) / MR. Substituting the given values, Elasticity = (6 - 3) / 3 = 1. Since elasticity is negative for demand, it is -2.

In a Monopoly Where the Marginal Revenue and Price Are