A straight- line demand curve with negative slope intersects the horizontal axis at 100 tonnes per week. At the midpoint on the demand curve (corresponding to 50 tonnes per week) the price elasticity of demand is
A) 1.0.
B) 0.5.
C) 0.
D) unknown without more information.

Question

Quizplus · Accepted Answer

At the midpoint of a straight-line demand curve, the price elasticity of demand is always equal to 1. This is because the percentage change in quantity demanded is exactly proportional to the percentage change in price at this point.

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