-Consider the straight- line demand curve illustrated in the figure above. At a price of $6, demand
A) is elastic.
B) is inelastic.
C) is unit elastic.
D) More information is needed to determine if the demand is elastic, unit elastic or inelastic.

Question

-Consider the straight- line demand curve illustrated in the figure above. At a price of $6, demand
A) is elastic. 
B) is inelastic. 
C) is unit elastic. 
D) More information is needed to determine if the demand is elastic, unit elastic or inelastic.

Quizplus · Accepted Answer

The demand curve is downward sloping, which means that as the price increases, the quantity demanded decreases. At a price of $6, the quantity demanded is 10 units. If the price were to increase to $7, the quantity demanded would decrease to 8 units. This means that the demand is elastic, because the percentage change in quantity demanded is greater than the percentage change in price.

-Consider the Straight- Line Demand Curve Illustrated in the Figure