Question

g A monopolist has four distinct groups of customers: group A has an elasticity of demand of 0.2, group B has an elasticity of demand of 0.8, group C has an elasticity of demand of 1.0, and group D has an elasticity of demand of 2.0. The group paying the lowest price for the product will be group:

Answer 1

Answer: Group D

Explanation:

Price elasticity of demand refers to how the quantity of goods and services responds due to a change in price.

From the information given, group A has an elasticity of demand of 0.2, and therefore will pay the highest price for the product. On the other hand, group D has an elasticity of demand of 2.0 and will pay the lowest price.