Figure 6-6 -Refer to Figure 6-6.As price falls from P_A to P_B, the quantity demanded increases the most along D₁; therefore A)D₁ is unit elastic. B)D₁ is more inelastic than D₂ or D₃. C)D₁ is more elastic than D₂ or D₃ D)D₁ is elastic at P_A but inelastic at P_B.

Question

Quizplus · Accepted Answer

The elasticity of demand refers to the responsiveness of quantity demanded to changes in price. Demand curve D₁ shows that as the price falls from P_A to P_B, the quantity demanded increases at a relatively higher rate than the other demand curves, indicating greater responsiveness to price changes. Therefore, D₁ is more elastic than D₂ or D₃.

Figure 6-6 -Refer to Figure 6-6.As Price Falls from PA to PB

Figure 6-6 -Refer to Figure 6-6.As Price Falls from P_A to P_B