Question

 For each of the regions listed in the following table, use the midpoint method to identify if the demand for this good is elastic, (approximately) unit elastic, or inelastic. 

True or False: The value of the price elasticity of demand is equal to the slope of the demand curve.

Answer 1

280 140 - Y 100 - Demand 0 QUANTITY (Units) For each of the regions listed in the following table, use the midpoint method to identify if the demand for this good is elastic, (approximately) unit elastic, or inelastic. Region Elastic Inelastic Unit Elastic Between Y and Z Between X and Y Between W and X True or False: The value of the price elasticity of demand is equal to the slope of the demand curve. Elasticity Between X - Y QD O True Price 140 20 O False 100 28 We have Initial Price Elasticity Between Y Z QD 140, New Price = 100, Price Initial Quantity = 20, New Quantity 28. PED ((QN Q) / (QN QI) 2) ((PN - PI) (PN PI) 100 28 56 40 2) We have: PED ((28 20) (28 20) 2) / ((100 140) (100 + 140) / 2) PED 0.0833/ -0.0833 PED -1 Since |PED 1 demand is unitary elastic Initial Price 100, New Price = 40, Initial Quantity = 28, New Quantity 56 PED ((QN QI) / (QN QI) / 2) / ((PN - PI) (PN PI) 2) PED ((56 28) (56 28) 2)/ ((40 100) (40100) 2) PED 0.1667 / -0.2143 PED -0.7778 1 = demand is inelastic. Since |PED Elasticity Between W- X Price OD 280 8 140 20 We have: Initial Price 280, New Price = 140, Initial Quantity (QI) = 8, New Quantity (QN) 20. PED ((QN QI) (QN QI) 2) / ((PN - PI) (PN PI) 2) PED ((20 8) (20 8) 2) ((140 280) (140 280)/ 2) PED 0.2143 / -0.1667 PED 1.2857 1 demand is elastic Since |PED PRICE (Dollars per unit)

Answer 2