The elastic portion of the downward-sloping straight-line demand curve lies:
A) at the intersection with the supply curve.
B) above the point of unit elasticity.
C) anywhere to the right of the current market price.
D) below the point where total revenue is maximized.

Question

Quizplus · Accepted Answer

The elastic portion of the demand curve is the top portion or the flatter portion of the curve. This means that a change in price will cause a large change in quantity demanded, indicating elasticity. In this portion, the price elasticity of demand is greater than 1, meaning that the percentage change in quantity demanded is greater than the percentage change in price. The point of unit elasticity (where the elasticity is equal to 1) is located where the curve begins to become steeper. Therefore, the elastic portion lies above the point of unit elasticity, making choice B the correct answer.

The Elastic Portion of the Downward-Sloping Straight-Line Demand Curve Lies