A straight- line demand curve with negative slope intersects the horizontal axis at 200 tonnes per week. The point on the demand curve at which the price elasticity of demand is 1 corresponds to a quantity demanded
A) of 200 tonnes.
B) of 100 tonnes.
C) of zero tonnes.
D) that would be negative if a negative quantity demanded were possible.

Question

Quizplus · Accepted Answer

The point on a straight-line demand curve where the price elasticity of demand equals 1 (unitary elasticity) is exactly at the midpoint between the axes it intersects. Since the demand curve intersects the horizontal axis at 200 tonnes, the midpoint quantity, where elasticity is 1, is at 100 tonnes.

A Straight- Line Demand Curve with Negative Slope Intersects the Horizontal