Based on research of Paul Rapport and others, it was thought that as access to (

Question

Based on research of Paul Rapport and others, it was thought that as access to (then) broadband Internet access capacities grew, the price (p) based on the information being sent and received would rise about 10%, with commercial sources using less than 4% of this capacity. Assume these figures hold true today. Therefore, what is the elasticity of demand for the commercial users? Is there a point in which inelasticity takes hold or will non-commercial use forestall inelastic tendencies in the market? Please support your position with peer reviewed scholarly sources.

Explanation / Answer

Elasticity of demand = %change in Quantity / % change in price = -4% / 10% = -0.4

Thus the elasticity of demand for the commercial users is -0.4

As the value of elasticity is -0.4 which is less than zero and greater than -1 then it is to be considered relatively inelastic.

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