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.

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pascal kyala · Accepted Answer

Final Answer : C, Explanation :  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/(p +  2 2 )When p = 3, we can substitute it in the demand function and get the quantity demanded:Q = 6,000/(3 +  2 2 )Q = 2,000/( +  2 2 )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/(3.6 +  2 2 )Q' = 1,666.67/( +  2 2 )% 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) = -0.833However, the question asks for the absolute value of the elasticity, so we take the positive value: 0.833Therefore, the answer is C)   1.20.

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.

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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 isA) 1.B) 2.20.C) 1.20.D) 1.70.E) 0.70.

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Related questions

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.