Figure 6-4
-Refer to Figure 6-4. Which of the following statements is true about the price elasticity of demand?
A) The elasticity coefficient is constant along the demand curve.
B) The elastic portion of a straight-line downward-sloping demand curve corresponds to the segment above the midpoint.
C) The inelastic portion of the demand curve corresponds to the segment above the midpoint.
D) At the midpoint of the demand curve, the elasticity coefficient is zero.

Question

Figure 6-4 
-Refer to Figure 6-4. Which of the following statements is true about the price elasticity of demand?
A) The elasticity coefficient is constant along the demand curve. 
B) The elastic portion of a straight-line downward-sloping demand curve corresponds to the segment above the midpoint. 
C) The inelastic portion of the demand curve corresponds to the segment above the midpoint. 
D) At the midpoint of the demand curve, the elasticity coefficient is zero.

Quizplus · Accepted Answer

The elastic portion of a straight-line downward-sloping demand curve corresponds to the segment above the midpoint. This is because price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. When the elasticity coefficient is greater than 1, demand is elastic, meaning that a small change in price results in a relatively large change in the quantity demanded. This corresponds to the segment above the midpoint where the slope of the curve is relatively flat. Conversely, the inelastic portion of the demand curve corresponds to the segment below the midpoint where the slope of the curve is relatively steep. At the midpoint of the demand curve, the elasticity coefficient is equal to 1, indicating unit elasticity.

Figure 6-4 -Refer to Figure 6-4. Which of the Following Statements Is