Figure 7-9
At a price of $10, the price elasticity of the demand curve depicted in Figure 7-9 is
A) positive.
B) approximately equal to − 0.1.
C) approximately equal to − 1.
D) approximately equal to − 2.

Question

Figure 7-9 
At a price of $10, the price elasticity of the demand curve depicted in Figure 7-9 is
A) positive. 
B) approximately equal to − 0.1. 
C) approximately equal to − 1. 
D) approximately equal to − 2.

Quizplus · Accepted Answer

At a price of $10, the quantity demanded is approximately 8, which corresponds to the midpoint of the demand curve. Using the midpoint formula, the percentage change in quantity demanded from 8 to 9 (a 12.5% increase) is approximately -1, and the percentage change in price from 10 to 9 (a 10% decrease) is also -1. Therefore, the price elasticity of demand is approximately equal to (-1)/(-1) = 1, which indicates unit elastic demand. Since the demand curve is downward sloping, the price elasticity of demand must be negative, and the only answer choice that meets these criteria is C.

Figure 7-9 at a Price of $10, the Price Elasticity of the Elasticity