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?
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4. Elasticity
Total Revenue Along a Linear Demand Curve
Multiple 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.
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