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AP Microeconomics 2.3: Price Elasticity of Demand

Calculate price elasticity of demand, classify responsiveness over a price range, and connect elasticity to changes in total revenue.

Syllabus
Effective Fall 2025
Course
AP Microeconomics

Covered syllabus points

MKT-3.E—a. Define measures of elasticity. b. Explain (using graphs where appropriate) measures of elasticity and the impact of a given…

2.3 Price Elasticity of Demand question 1

[Maximum number: 1]

Arzeye Pharma has a patent, a legal barrier to entry, on its newly developed eye treatment that cures common eye problems. Arzeye Pharma is currently earning positive economic profit and is producing the profit-maximizing quantity of eye treatments.

Suppose Arzeye Pharma wants to charge a price that maximizes its total revenue rather than its profit.

At quantity QR\mathrm{Q}_{\mathrm{R}} identified in part (b)(i), is the demand for eye treatments elastic, inelastic, or unit elastic?

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