Answer to Question #106617 in Microeconomics for karina hernandez

Question

if a monopolist sell 10 units at a price of $5 and 15 units at a price of $4 what is elasticity of demand

Answer 1

$E=|\frac {(Q2-Q1)}{Q1}$$×\frac {P1}{P2--P1}|;$

$E=|5/10×5/(-1)|=|0.5×(-5)|=$ % $2.5$

answer: demand will increase by 2.5% with a decrease in price by 1%.