Refer to Figure 20.2.Suppose the areas 0P₁AB and 0P₂CD are equal.We can conclude that the price elasticity of demand between point A and point C is A)Elastic. B)Inelastic. C)Unitary elastic. D)Impossible to determine.It depends on whether the price has increased or decreased.

Question

Quizplus · Accepted Answer

If the areas 0P₁AB and 0P₂CD are equal, then it means that the percentage change in quantity demanded is equal to the percentage change in price (price elasticity of demand is 1), which is the definition of unitary elastic. The information provided does not allow us to determine whether the price has increased or decreased, but that is not relevant to determining the elasticity of demand between A and C.