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Author Question: Why is the price elasticity of demand generally a negative number? What will be an ideal ... (Read 105 times)

EY67

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on: Jun 29, 2018
Why is the price elasticity of demand generally a negative number?
 
  What will be an ideal response?

Question 2

A monopolist has the power to set price, but is not entirely free to set the price of its product. Explain.
 
  What will be an ideal response?


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pami445

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

The law of demand says that an increase in the price of a product will lead to a decrease in quantity demanded. Thus, price and quantity demanded are inversely related to one another. This means that if either the numerator or the denominator of the ratio is positive, the other will be negative.

Answer to Question 2

A monopolist faces a downward-sloping demand curve. As a result, to sell more of a good a monopolist must lower the price. How much the price must be lowered is determined by the price elasticity of demand.


EY67

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Reply 2 on: Jun 29, 2018
Gracias!

yeungji

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Reply 3 on: Yesterday
Excellent

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