Figure 7-8

-Refer to Figure 7-8.As price falls from PA to PB,the quantity demanded increases most along D₁; therefore,

Question

Figure 7-8
 
-Refer to Figure 7-8.As price falls from PA to PB,the quantity demanded increases most along D₁; therefore,

Quizplus · Accepted Answer

According to the law of demand, as the price falls, the quantity demanded increases. In Figure 7-8, we can observe that the quantity demanded increases the most along D₁ as the price falls from PA to PB. This indicates that D₁ is more elastic than D₂ or D₃. Therefore, option C is the best choice. Option A is not correct because D₁ is not unit elastic. Option B is not correct as it suggests that D₁ is more inelastic than D₂ or D₃, which is not true based on the given information. Option D is also not correct because it suggests that D₁ is inelastic at PB, but we do not have enough information to make this conclusion.

Figure 7-8 -Refer to Figure 7-8.As Price Falls from PA to PB,the