Question

Use the following information to answer Questions 10 and 11. Consider the following demand curve: Price $ 1 2 3 6 7 4 5 Quantity

10. What is the price elasticity of demand at point B?

1. (a) -3

2. (b) -0.33

3. (c) -0.05

4. (d) None of the above.

11. At which point is the price elasticity of demand unit elastic?

1. (a) A

2. (b) B

3. (c) C

4. (d) None of the above.

Answer 1

Price elasticity = dQ/dP x P/Q = 1/slope x P/Q

10) Price elasticity = -8/20 x 15/2 = - 3 (option a)

11) option c is correct

(At point C , PE = - 8/20 x 10/4 = -1 (unit elastic))