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Price Elasticity of Demand · Question 42 of 62

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

Question 42

MediumOriginal question

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

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 42

Show the answer and explanation
CorrectNot quiteAnswer C

Correct answer: C

Explanation

  1. At R, P = 8 and Q = 20.

  2. eₚ = 10 × 8 ÷ 20 = 4: elastic, as everywhere above the midpoint.

Concept
Elasticity above the midpoint
Typical time
70 s
Your time
—
The rule this testsDegrees of elasticity
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