Use the Following to Answer Question(s): Demand and Price Elasticity

question 159

Multiple Choice

Use the following to answer question(s) : Demand and Price Elasticity 2

-(Exhibit: Demand and Price Elasticity 2) The price elasticity of demand between points A and B is:

• A) elastic, since total revenue falls when price falls from $8 to $6.
• B) elastic, since total revenue increases when price falls from $8 to $6.
• C) inelastic, since the percentage change in quantity is less than the percentage change in price when price falls from $8 to $6.
• D) positive, because the slope is negative.

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Definitions:

Same Price

A situation where different products, services, or commodities are sold for an identical amount of money.

Market 1

A generalized term referring to a space or system in which buyers and sellers engage in the exchange of goods, services, or information.

Market 2

A term that might refer to a secondary or alternative market for goods, services, or securities distinct from the primary or original market.

Discriminating Monopolist

A monopolist that charges different prices to different consumers or in different markets for the same product, based on the willingness to pay.