Figure 5-1
-Refer to Figure 5-1.Between point A and point B,the slope is equal to
A)-1/4,and the price elasticity of demand is equal to 2/3.
B)-1/4,and the price elasticity of demand is equal to 3/2.
C)-3/2,and the price elasticity of demand is equal to 1/4.
D)-2/3,and the price elasticity of demand is equal to 3/2.

Question

Figure 5-1 
-Refer to Figure 5-1.Between point A and point B,the slope is equal to
A)-1/4,and the price elasticity of demand is equal to 2/3. 
B)-1/4,and the price elasticity of demand is equal to 3/2. 
C)-3/2,and the price elasticity of demand is equal to 1/4. 
D)-2/3,and the price elasticity of demand is equal to 3/2.

Quizplus · Accepted Answer

The slope of the line is equal to the change in price (rise) divided by the change in quantity demanded (run). Between point A and point B, the slope is -1/4 (decrease in price of $2 divided by increase in quantity demanded of 8). The price elasticity of demand is equal to the percentage change in quantity demanded divided by the percentage change in price. Using the midpoint method, the price elasticity of demand between point A and point B is [8/(10+6)/2] / [$2/(6+10)/2] = 3/2. Therefore, the best choice is B, where the slope is -1/4 and the price elasticity of demand is 3/2.

Figure 5-1 -Refer to Figure 5-1.Between Point a and Point B,the Slope