Question
1-In a local market, the monthly price of Internet access service increases from $40 per account to $52 per account, and the total quantity of
1-In a local market, the monthly price of Internet access service increases from $40 per account to $52 per account, and the total quantity of monthly accounts across all Internet access providers decreases from 1,000,000 to 600,000
a) If other things were equal, what is the price elasticity of demand?
b) Is demand elastic, unit-elastic, or inelastic?
c) How to interpret the price elasticity calculated in part a?
2- Over a range of prices, the price elasticity of demand varies from 10 to 1.1. Over another range of prices, the price elasticity of demand varies from 0.90 to 0.50. What to say about total revenues and the total revenue curve over these two ranges of the demand curve as price falls?
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