Multiple Choice
Use this graph to answer the following questions.
What is the elasticity of demand when the price of the good changes from $3 to $5?
4. Elasticity
Total Revenue Along a Linear Demand Curve
Struggling with Macroeconomics?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Use this graph to answer the following questions.
At what price is the elasticity of demand for the product equal to one?
A
$2
B
$3
C
$4
D
$5
Verified step by step guidance1
Identify the demand curve on the graph, which is a straight line with a negative slope, indicating a linear demand curve.
Recall that the price elasticity of demand is equal to one (unitary elasticity) at the midpoint of a linear demand curve.
Determine the endpoints of the demand curve from the graph. The curve starts at a price of $6 and a quantity of 0, and ends at a price of $0 and a quantity of 150.
Calculate the midpoint of the demand curve. The midpoint in terms of quantity is (0 + 150) / 2 = 75, and in terms of price, it is (6 + 0) / 2 = 3.
Conclude that the price at which the elasticity of demand is equal to one is the price at the midpoint of the demand curve, which is $3.
7:13mWatch next
Master Total Revenue Along a Linear Demand Curve with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
Total Revenue Along a Linear Demand Curve practice set
Problem sets built by lead tutorsExpert video explanations