-Refer to Figure 5.2.Using the initial-value method,the value of the price elasticity of demand from Point E to Point F can be described as
A) elastic.
B) inelastic.
C) unit elastic.
D) zero.

Question

-Refer to Figure 5.2.Using the initial-value method,the value of the price elasticity of demand from Point E to Point F can be described as
A) elastic. 
B) inelastic. 
C) unit elastic. 
D) zero.

Quizplus · Accepted Answer

The initial-value method for calculating price elasticity of demand involves comparing the percentage change in quantity demanded to the percentage change in price from the initial point. If the absolute value of this elasticity is less than 1, the demand is considered inelastic, meaning that the percentage change in quantity demanded is less than the percentage change in price. This is the case when moving from Point E to Point F, indicating that demand is inelastic.