Answer the question on the basis of the demand schedule shown below: $$77162534435\begin{array}{l}\begin{array} { c c c } &&\text { Quantity }\\\text { Price } && \text { Demanded } \\\hline\$ 77 & & 1 \\6 & & 2 \\5 & & 3 \\4 & & 4 \\3 & & 5\end{array}\end{array}$ Refer to the data.At the point where 3 units are being sold,the coefficient of price elasticity of demand:

A) cannot be estimated.
B) suggests that the market is purely competitive.
C) is less than unity (one) .
D) is greater than unity (one) .

Question

Answer the question on the basis of the demand schedule shown below:

$77162534435\begin{array}{l}\begin{array} { c c c } &&\text { Quantity }\\\text { Price } && \text { Demanded } \\\hline\$ 77 & & 1 \\6 & & 2 \\5 & & 3 \\4 & & 4 \\3 & & 5\end{array}\end{array}

Refer to the data.At the point where 3 units are being sold,the coefficient of price elasticity of demand:

A) cannot be estimated.
B) suggests that the market is purely competitive.
C) is less than unity (one) .
D) is greater than unity (one) .

Jeraldine Nicole · Accepted Answer

Final Answer : D, Explanation :  The coefficient of price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. At the point where 3 units are being sold, if the price decreases from $5 to $4 (a decrease of $1 from a base of $5, or 20%), the quantity demanded increases from 3 units to 4 units (an increase of 1 unit from a base of 3 units, or approximately 33.33%). This results in an elasticity coefficient greater than 1 (33.33% / 20% = 1.67), indicating that the demand is elastic at this point.

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