Figure 5-9

-Refer to Figure 5-9.Between point A and point B,
A)the slope is equal to -1/4 and the price elasticity of demand is equal to 2/3.
B)the slope is equal to -1/4 and the price elasticity of demand is equal to 3/2.
C)the slope is equal to -3/2 and the price elasticity of demand is equal to 1/4.
D)the slope is equal to -2/3 and the price elasticity of demand is equal to 3/2.

Question

Figure 5-9
 
-Refer to Figure 5-9.Between point A and point B,
A)the slope is equal to -1/4 and the price elasticity of demand is equal to 2/3. 
B)the slope is equal to -1/4 and the price elasticity of demand is equal to 3/2. 
C)the slope is equal to -3/2 and the price elasticity of demand is equal to 1/4. 
D)the slope is equal to -2/3 and the price elasticity of demand is equal to 3/2.

Quizplus · Accepted Answer

Between point A and B, the slope of the curve is -1/4 (change in quantity/change in price) and the price elasticity of demand is equal to the absolute value of (change in quantity/change in price) multiplied by (price/quantity) = (1/4) * (4/3) = 1/3. The inverse of 1/3 is 3/1 or 3, which is equivalent to the ratio of the percentage change in quantity to the percentage change in price. Hence, the price elasticity of demand is 3/2. Thus, choice B is correct.

Figure 5-9 -Refer to Figure 5-9.Between Point a and Point B