From last year to this year, the markup of a monopoly has decreased. We can conclude that, in absolute value, the price elasticity of demand has:
A)remained the same.
B)decreased.
C)increased.
D)we cannot conclude.

Question

Quizplus · Accepted Answer

If the markup of a monopoly decreases but the price remains the same, it means that the demand for the product has become more elastic because consumers are not willing to pay the same high price as before. This implies that the absolute value of the price elasticity of demand has increased.

From Last Year to This Year, the Markup of a Monopoly