Figure 7-11

-Refer to Figure 7-11.As price falls from PA to PB,we could use the three demand curves to calculate three different values of the price elasticity of demand.Which of the three demand curves would produce the smallest elasticity?
A)D₁
B)D₂
C)D₃
D)All of the above are equally elastic.

Question

Figure 7-11
 
-Refer to Figure 7-11.As price falls from PA to PB,we could use the three demand curves to calculate three different values of the price elasticity of demand.Which of the three demand curves would produce the smallest elasticity?
A)D₁ 
B)D₂ 
C)D₃ 
D)All of the above are equally elastic.

Quizplus · Accepted Answer

Demand curve D₃ is steeper than D₁ and D₂, meaning it has a smaller slope and therefore a smaller elasticity of demand. As price falls from PA to PB, the quantity demanded on D₃ changes less than the change in quantity demanded on D₁ and D₂, resulting in a smaller percentage change in quantity demanded for a given percentage change in price. Thus, the elasticity of demand is smaller on D₃ compared to D₁ and D₂.

Figure 7-11 -Refer to Figure 7-11.As Price Falls from PA to PB,we