3. Suppose a straight-line, downward-sloping demand curve shifts right due to an increase in consumer preferences....
3. Suppose a straight-line, downward-sloping demand curve shifts right due to an increase in consumer preferences. Is the price elasticity of demand higher, lower, or the same between any two prices on the new (higher) demand curve than on the old (lower) demand curve?
Homework Answers
Elasticity of demand = dQ/dP * P/Q
dQ/dP = Slope of demand curve.
Since slope of both curves are same. or there is parallel shift in demand curve.
Price is also same, but quantity has increased for new demand curve. thus, Shifted Demand curve shows that demand is inelastic. or it is more inelastic.
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