Refer to the accompanying figure. Let εX denote the price elasticity of demand at point X. Which of the following describes the relationship between εA, εB and εC?
A)εA εC εB
B)εA εB εC
C)εC εB εA
D)εB εC εA

Question

Refer to the accompanying figure. Let εX denote the price elasticity of demand at point X. Which of the following describes the relationship between εA, εB and εC? 
A)εA> εC> εB 
B)εA> εB> εC 
C)εC> εB> εA 
D)εB> εC> εA

Quizplus · Accepted Answer

The slopes of these two lines are exactly the same. Thus, since the elasticity of demand equals (P/Q)× (1/slope), a comparison of the elasticities at points A, B, and C, only requires a comparison of P/Q. Note that this ratio is highest at point A, second highest at point C and the lowest at point B. Thus, we know that εA> εC> εB.

Refer to the Accompanying Figure