Refer to the figure below. At P = 4, how does the price elasticity of demand for D1 compare to that for D2?
A)It will be equal for D1 and D2.
B)It will be greater for D1 than for D2.
C)It will be lower for D1 than D2.
D)The price elasticity of demand for both D1 and D2 will be greater than one.

Question

Refer to the figure below. At P = 4, how does the price elasticity of demand for D1 compare to that for D2? 
A)It will be equal for D1 and D2. 
B)It will be greater for D1 than for D2. 
C)It will be lower for D1 than D2. 
D)The price elasticity of demand for both D1 and D2 will be greater than one.

Quizplus · Accepted Answer

At P = 4, D1 has a steeper demand curve than D2, meaning that small changes in price will cause larger changes in quantity demanded for D1 than for D2. This indicates that D1 is more elastic at P = 4, so the price elasticity of demand for D1 will be lower than that for D2.

Refer to the Figure Below