Figure 5-1

-Refer to Figure 5-1.Suppose the point labeled B is the "halfway point" on the demand curve and it corresponds to a price of $5.00.Then,between prices of $4.90 and $5.10,
A)the price elasticity of demand is less than 1.
B)the price elasticity of demand is equal to 1.
C)the price elasticity of demand is greater than 1.
D)any of the above could be correct, depending on the quantities demanded at prices of $4.90 and $5.10.

Question

Figure 5-1
 
-Refer to Figure 5-1.Suppose the point labeled B is the "halfway point" on the demand curve and it corresponds to a price of $5.00.Then,between prices of $4.90 and $5.10,
A)the price elasticity of demand is less than 1. 
B)the price elasticity of demand is equal to 1. 
C)the price elasticity of demand is greater than 1. 
D)any of the above could be correct, depending on the quantities demanded at prices of $4.90 and $5.10.

Quizplus · Accepted Answer

At the halfway point on the demand curve, the price elasticity of demand is equal to 1, indicating unit elastic demand. This means that a change in price from $4.90 to $5.10 will result in an equal percentage change in quantity demanded, keeping total revenue constant.

Figure 5-1 -Refer to Figure 5-1.Suppose the Point Labeled B Is the Labeled