Refer to Figure 2.4.The elasticity of demand at point a is given by:
A) the slope of line cd times (P1/Q1).
B) the slope of line ab times (Q1/P1).
C) the inverse of the slope of line cd times (P1/Q1).
D) the inverse of the slope of line ab times (Q1/P1).

Question

Refer to Figure 2.4.The elasticity of demand at point a is given by: 
A) the slope of line cd times (P1/Q1). 
B) the slope of line ab times (Q1/P1). 
C) the inverse of the slope of line cd times (P1/Q1). 
D) the inverse of the slope of line ab times (Q1/P1).

Quizplus · Accepted Answer

The elasticity of demand at point a is the percentage change in quantity demanded divided by the percentage change in price at point a. This can be found by taking the inverse of the slope of the demand curve at point a, which is the tangent to the curve at that point. Therefore, the correct choice is C, which is the inverse of the slope of line cd times (P1/Q1).