Asked by Sierra Schick on Jul 17, 2024
Verified
Refer to Figure 5.4. Along the given demand curve, which of the following is true?
A) Demand is less elastic along the segment AB than the segment EF.
B) Demand is less elastic along the segment EF than the segment AB.
C) Since the demand curve is linear, the price elasticity of demand between each of the points is the same.
D) All of the above are true.
Price Elasticity
A measure reflecting how demand for a particular good shifts with adjustments in its pricing.
Demand Curve
A graph showing the relationship between the price of a good and the quantity demanded by consumers at those prices, typically downward sloping.
- Decode graphical displays of demand to ascertain its elasticity.
Verified Answer
SR
Sandra ReyesJul 17, 2024
Final Answer :
B
Explanation :
Demand elasticity varies along a linear demand curve. It is more elastic at higher prices and lower quantities (like segment EF) and less elastic at lower prices and higher quantities (like segment AB). This is because the percentage change in quantity demanded is larger at higher prices for a given absolute change in price, making demand more elastic at the upper end of the demand curve.
Learning Objectives
- Decode graphical displays of demand to ascertain its elasticity.