- Refer to Figure 20.2.If the area 0P₁AB is less than the area 0P₂CD,we can conclude that the price elasticity of demand between point A and point C is

Question

- Refer to Figure 20.2.If the area 0P₁AB is less than the area 0P₂CD,we can conclude that the price elasticity of demand between point A and point C is A)Elastic. B)Inelastic. C)Unitary elastic.

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. In this case, the area 0P₁AB represents the quantity demanded at price P₁, and the area 0P₂CD represents the quantity demanded at price P₂. If the area 0P₁AB is less than the area 0P₂CD, then the quantity demanded has decreased by a greater percentage than the price has increased. This indicates that the demand is elastic, meaning that consumers are responsive to changes in price.