In the graph, by the total expenditure method, what is demand like along the curve? A demand curve D bowed towards the origin: point A at price ₹10 and quantity 20, point B at price ₹5 and quantity 40; price × quantity is ₹200 at every point.

In the graph, by the total expenditure…

In the graph, by the total expenditure method, what is demand like along the curve?

Question 37

MediumOriginal question

In the graph, by the total expenditure method, what is demand like along the curve?

A demand curve D bowed towards the origin: point A at price ₹10 and quantity 20, point B at price ₹5 and quantity 40; price × quantity is ₹200 at every point.

Elastic, because quantity doubles from A to BCorrect answerYour answerInelastic, because price halves from A to BCorrect answerYour answerUnitary elastic, because spending is ₹200 at every pointCorrect answerYour answerPerfectly inelastic, because the curve bendsCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

At A: 10 × 20 = ₹200. At B: 5 × 40 = ₹200. Spending is the same at every point of the curve.
Unchanged spending when price changes is unitary elasticity; such a curve is a rectangular hyperbola.

Worth noting

Doubling quantity alone says nothing; what matters is that spending did not change.

Concept: Unitary elasticity on a graph
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsDegrees of elasticity

Practise this chapter →

Ten questions from Price Elasticity of Demand, at your own pace.

Practise this chapter →

Ten questions from Price Elasticity of Demand, at your own pace.

In the graph, by the total expenditure method, what is demand like along the curve?

Question 37

Explanation