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Price Elasticity of Demand · Question 44 of 62

In the graph, what is the price elasticity of demand at point S?

Question 44

HardOriginal question

In the graph, what is the price elasticity of demand at point S?

A straight-line demand curve D from a price of ₹10 (quantity 0) to a quantity of 100 (price 0), Qd = 100 − 10P. Point R is at ₹8 and 20 units, the midpoint M at ₹5 and 50 units, and S at ₹2 and 80 units.
Options for question 44

Show the answer and explanation
CorrectNot quiteAnswer A

Correct answer: A

Explanation

  1. At S, P = 2 and Q = 80.

  2. eₚ = 10 × 2 ÷ 80 = 0.25: inelastic, as everywhere below the midpoint.

Worth noting

4 is the elasticity at R, above the midpoint.

Concept
Elasticity below the midpoint
Typical time
100 s
Your time
—
The rule this testsDegrees of elasticity
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