Refer to the information provided in Figure 5.2 below to answer the question(s) that follow. Figure 5.2
-Refer to Figure 5.2. At Point C the price elasticity of demand is -1. Along line segment AB of the demand curve, the demand is
A) elastic.
B) unit elastic.
C) inelastic.
D) either elastic or inelastic, depending on whether price increases or decreases.

Question

Refer to the information provided in Figure 5.2 below to answer the question(s) that follow.  Figure 5.2
-Refer to Figure 5.2. At Point C the price elasticity of demand is -1. Along line segment AB of the demand curve, the demand is
A) elastic. 
B) unit elastic. 
C) inelastic. 
D) either elastic or inelastic, depending on whether price increases or decreases.

Quizplus · Accepted Answer

Along line segment AB of the demand curve, the demand is elastic because the absolute value of the price elasticity of demand is greater than 1. This is inferred from the fact that at point C, the elasticity is exactly -1 (unit elastic), and elasticity varies along a linear demand curve, becoming more elastic as we move up the curve (towards A) and more inelastic as we move down the curve (towards B).

Refer to the Information Provided in Figure 5