4. Elastic, inelastic, and unit-elastic demand Aa Aa The following graph shows t

Question

4. Elastic, inelastic, and unit-elastic demand Aa Aa The following graph shows the demand for a good. PRICE (Dollars per unit) 140-W IDemand 20 l? ,--,- 0 820 28 56 QUANTITY For each of the following regions, use the midpoint method to identify whether the demand for this good is elastic, (approximately) unit elastic, or inelastic. Elastic, Inelastic, or Unit Elastic? Region Between W and X Elastic Between X and YElastic Between Y and Z | Elastic ? True or False: The value of the price elasticity of demand is equal to the slope of the demand curve. O True O False

Explanation / Answer

% Change in Q

% Change in P

Elasticity

Between W and X

1.5

1

1.50

Elastic as the value is greater than 1

Between X and Y

0.4

0.4

1.00

Unit elastic, as the value is 1

Between Y and Z

1

1.5

0.67

In elastic, as the value is less than 1

True. As price elasticity of demand is the change in Q to change in price which is equal to slope

% Change in Q

% Change in P

Elasticity

Between W and X

1.5

1

1.50

Elastic as the value is greater than 1

Between X and Y

0.4

0.4

1.00

Unit elastic, as the value is 1

Between Y and Z

1

1.5

0.67

In elastic, as the value is less than 1

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