Figure 5-4

-Refer to Figure 5-4.As price falls from PA to PB,which demand curve represents the most elastic demand?
A)D₁
B)D₂
C)D₃
D)All of the above are equally elastic.

Question

Figure 5-4
 
-Refer to Figure 5-4.As price falls from PA to PB,which demand curve represents the most elastic demand?
A)D₁ 
B)D₂ 
C)D₃ 
D)All of the above are equally elastic.

Quizplus · Accepted Answer

As price falls from PA to PB, the demand curve that shows the highest responsiveness to the price change (i.e. the most elastic demand) is D₁. This is because the decline in price results in a relatively large increase in quantity demanded. In contrast, D₂ and D₃ have smaller changes in quantity demanded in response to the same price decrease, indicating less elasticity of demand.

Figure 5-4 -Refer to Figure 5-4.As Price Falls from PA to PB,which