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Author Question: When the price of toothpaste increases by 15 percent, the quantity of toothpaste demanded falls by ... (Read 102 times)

torybrooks

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on: Jun 29, 2018
When the price of toothpaste increases by 15 percent, the quantity of toothpaste demanded falls by 30 percent. Calculate the price elasticity of demand. Is the demand for toothpaste elastic, inelastic, or unit elastic?
 
  What will be an ideal response?

Question 2

In the above figure, if the natural monopoly is not regulated then consumer surplus is
 
  A) 48 million.
  B) 60 million.
  C) 108 million.
  D) 192 million.


cloud

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Price elasticity of demand = -30/15 = -2 . Since the absolute value of the price elasticity is greater than one, the demand for toothpaste is elastic.

Answer to Question 2

A


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