Figure 4-5 -Refer to Figure 4-5.As price falls from PA to PB,the quantity demanded increases 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 PA but inelastic at PB.

Question

Quizplus · Accepted Answer

The quantity demanded increases more along D₁ as the price falls from PA to PB, indicating that this segment is more responsive to price changes and thus more elastic. Therefore, option C is the best choice. Option A is incorrect because unit elastic demand occurs when the percentage change in quantity demanded is equal to the percentage change in price. Option B is incorrect because there is no information in the graph to suggest that D₁ is less inelastic than the other segments. Option D is incorrect because the elasticity of demand is only defined at a specific point on the demand curve, rather than a range of prices.

Figure 4-5 -Refer to Figure 4-5.As Price Falls from PA to PB,the