Question

CENGAGE MINDTAP Homework (Ch 05) 4. Elastic, inelastic, and unit-elastic demand The following graph shows the demand for a good. 9, 35 ft 10 Demand 14 QUANTITY (Units) 14 MacBook Pro PRICE (Dollars per unit) ....

Answer 1

Elasticity = (Change in quantity / Average quantity) / (Change in price / Average price)

(a) Between Y and Z

At point Y, Price = 35 and Quantity = 9.

At point Z, Price = 10 and Quantity = 14

change in quantity = (14-9)/ ((14+9)/2))

change in price = (9-35)/ ((9+35)/2)

Elasticity = [(14-9)/ ((14+9)/2)] / [(9-35)/((9+35)/2)] = -0.367

As elasticity is less than 1, it is inelastic

b) between W and X

Elasticity = [(7-2)/ ((7+2)/2)] / [(45-70)/((45+70)/2) = -2.55

elasticity is more than 1, it is elastic

c) between X and Y

Elasticity = [(9-7)/((9+7)/2)]/ [(35-45)/((45+35)/2)] = -1

elasticity is equal to 1, so elastic

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False

the slope of demand is fixed while price elasticity keeps on changing as we can see above.