Table of contents

1. Introduction to Macroeconomics1h 57m
2. Introductory Economic Models59m
3. Supply and Demand3h 43m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Price Floors3h 40m
6. Introduction to Taxes1h 25m
7. Externalities1h 3m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. Introducing Economic Concepts49m
11. Gross Domestic Product (GDP) and Consumer Price Index (CPI)1h 37m
12. Unemployment and Inflation1h 15m
13. Productivity and Economic Growth1h 17m
14. The Financial System1h 37m
15. Income and Consumption52m
16. Deriving the Aggregate Expenditures Model1h 22m
17. Aggregate Demand and Aggregate Supply Analysis1h 18m
18. The Monetary System1h 1m
19. Monetary Policy1h 32m
20. Fiscal Policy1h 0m
21. Revisiting Inflation, Unemployment, and Policy46m
22. Balance of Payments30m
23. Exchange Rates1h 16m
24. Macroeconomic Schools of Thought40m
25. Dynamic AD/AS Model35m
26. Special Topics11m

4. Elasticity

Elasticity Summary

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Multiple Choice

A linear, downward-sloping demand curve is

Inelastic

Unit Elastic

Elastic

Inelastic at some points, and elastic at others

Next problem

Verified step by step guidance

Understand the concept of elasticity: Elasticity measures how much the quantity demanded of a good responds to a change in price. If the quantity demanded changes significantly with a small change in price, the demand is elastic. If it changes little, the demand is inelastic.

Recognize the characteristics of a linear demand curve: A linear demand curve is a straight line, which means the slope is constant. However, elasticity is not constant along the curve.

Identify the relationship between slope and elasticity: Elasticity depends on both the slope of the demand curve and the price and quantity at a given point. The formula for elasticity is \( E_d = \frac{\text{Percentage change in quantity demanded}}{\text{Percentage change in price}} \).

Analyze different points on the demand curve: At higher prices and lower quantities, the demand tends to be elastic because consumers are more responsive to price changes. At lower prices and higher quantities, the demand tends to be inelastic because consumers are less responsive to price changes.

Conclude that a linear demand curve is elastic at high prices and low quantities, unit elastic at the midpoint, and inelastic at low prices and high quantities. This explains why the correct answer is that the demand curve is inelastic at some points and elastic at others.