Refer to the following figure.The point elasticities of demand for D₁,D₂,and D₃ at a price of $5 are ________,________,and _______,respectively. A)-1.4; -0.2; -1.4 B)-0.71; -5; -0.71 C)-1.4; -0.2; -5 D)-12; -6; -12 E)-0.0833; -0.1667; -0.0833

Question

Quizplus · Accepted Answer

To calculate the point elasticity of demand, we use the formula: E(subscript d) = (% change in quantity demanded / % change in price) x (1.0 / price elasticity of demand) Using the values given in the graph for each demand curve, we can calculate the price elasticity of demand at a price of $5: - For D₁, the price elasticity of demand is (-2 / 5) x (5 / 2) = -1 - For D₂, the price elasticity of demand is (-1 / 2) x (5 / 5) = -0.5 - For D₃, the price elasticity of demand is (-0.5 / 1) x (5 / 10) = -0.25 Now we can plug these values into the formula for point elasticity of demand at a price of $5: - For D₁, E(subscript d) = -1 x (1 / (-1)) = 1 - For D₂, E(subscript d) = -0.5 x (1 / (-0.5)) = 1 - For D₃, E(subscript d) = -0.25 x (1 / (-0.25)) = 1 Therefore, the point elasticities of demand for D₁, D₂, and D₃ at a price of $5 are all 1. The closest option is B.

Refer to the Following Figure