Exhibit 9-2

-Between which quantities in Exhibit 9-2 is demand unit elastic?
A) 1 and 2
B) 2 and 3
C) 3 and 4
D) 4 and 5
E) 5 and 6

Question

Exhibit 9-2
 
-Between which quantities in Exhibit 9-2 is demand unit elastic?
A) 1 and 2 
B) 2 and 3 
C) 3 and 4 
D) 4 and 5 
E) 5 and 6

Quizplus · Accepted Answer

Demand unit elastic refers to a situation where the percentage change in quantity demanded equals the percentage change in price. In Exhibit 9-2, the unit elastic range is between points 3 and 4 because the slope of the demand curve is equal to -1 at that point, indicating that a 1% increase in price results in a 1% decrease in quantity demanded, resulting in no net change in total revenue. Before point 3, demand is considered to be inelastic, meaning that a change in price results in a smaller percentage change in quantity demanded. After point 4, demand is considered to be elastic, meaning that a change in price results in a larger percentage change in quantity demanded.

Exhibit 9-2 -Between Which Quantities in Exhibit 9-2 Is Demand Unit Elastic