FIGURE 4-2
-Refer to Figure 4-2.In diagram 1,the elasticity of demand for prices below $10 is
A)0.
B)less than 1.
C)1.
D)greater than 1.
E)infinity.

Question

FIGURE 4-2
-Refer to Figure 4-2.In diagram 1,the elasticity of demand for prices below $10 is
A)0. 
B)less than 1. 
C)1. 
D)greater than 1. 
E)infinity.

Quizplus · Accepted Answer

The elasticity of demand is less than 1 when the percentage change in quantity demanded is less than the percentage change in price. In this case, the percentage change in quantity demanded is 10% (from 100 to 110 units) and the percentage change in price is 20% (from $10 to $12). Therefore, the elasticity of demand is less than 1.

FIGURE 4-2 -Refer to Figure 4-2.In Diagram 1,the Elasticity of Demand for Demand