In the graph, along a straight-line demand curve, elasticity is 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.

In the graph, along a straight-line demand…

In the graph, along a straight-line demand curve, elasticity is

Question 45

HardOriginal question

In the graph, along a straight-line demand curve, elasticity is

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.

different at each point: above 1 above the midpoint, below 1 below itCorrect answerYour answerthe same at every point, because the slope is constantCorrect answerYour answer1 at every pointCorrect answerYour answer0 at every pointCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Elasticity = slope term × P ÷ Q. The slope term is fixed, but P ÷ Q falls as we move down the line.
So eₚ is 4 at R, 1 at M and 0.25 at S: infinite where the line meets the price axis, zero where it meets the quantity axis.

Worth noting

A constant slope is not a constant elasticity: slope uses changes, elasticity uses percentage changes.

Concept: Elasticity varies along a straight line
Typical timeTypical: 100 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, along a straight-line demand curve, elasticity is

Question 45

Explanation