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Calculating Elasticity and Percentage Changes

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1.

    • close to zero
      Correct. Since this medicine is essential for living it makes the demand for the medicine highly inelastic and the elasticity is closer to zero.
    • above 1.0
      Incorrect. This would indicate the medicine was elastic which is unlikely since it is essential for living. This makes the demand for the medicine highly inelastic and therefore the elasticity is closer to zero.
    • equal to 1.0
      Incorrect. This would indicate the medicine was elastic which is unlikely since it is essential for living. This makes the demand for the medicine highly inelastic and the elasticity is closer to zero.