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

Question

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

Quizplus · Accepted Answer

The elasticity of demand is exactly 1 when the percentage change in quantity demanded is equal to the percentage change in price. In this case, the price increases from $9 to $10, and the quantity demanded decreases from 100 to 90. The percentage change in price is (10 - 9) / 9 = 0.111, and the percentage change in quantity demanded is (90 - 100) / 100 = -0.1. Therefore, the elasticity of demand is -0.1 / 0.111 = -0.9, which is exactly 1.

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