Question

3. The variety of demand curves The following graph displays four demand curves (LL. MM, NN, and OO) that intersect at point A 20 18 16 LA 12 10 0 46 0 14 16 18 20 Using the graph, complete the table that follows by indicating whether each statement is true or false. Statement Between points A and B, curve LL is perfectly inelastic. Curve MM is less elastic between points A and C than curve NN is between points A and D. O Between points A and C, curve MM is elastic. True False Grade It Now Save & Continue Continue without saving

Answer 1

A more elastic curve has a lower slope than a less elastic curve. So flatter curve is more elastic. The perfect elastic means a horizontal straight line. Perfect inelastic means vertical straight line.

Curve LL is horizontally straight so between point A and B, LL is perfectly elastic. The given statement is FALSE.

MM curve is flatter than curve NN so MM is more elastic than NN. So the given statement is FALSE.

Elastic curve means quantity will be affected by the price change. It is not mentioned that MM curve is highly elastic or less elastic so we can not judge on the intensity of the effect of price on quantity. But when the price is increased from A to C the quantity is decreased. So MM is elastic between A to C. So the statement is TRUE.