Figure 7-7

-Refer to Figure 7-7.Which of the following statements about price elasticity of demand is true?
A) The elasticity coefficient is constant along the demand curve.
B) The elastic portion of a straight-line, downward-sloping demand curve corresponds to the segment above the midpoint.
C) The inelastic portion of the demand curve corresponds to the segment above the midpoint.
D) At the midpoint of the demand curve, the elasticity coefficient is zero.

Question

Figure 7-7
 
-Refer to Figure 7-7.Which of the following statements about price elasticity of demand is true?
A) The elasticity coefficient is constant along the demand curve. 
B) The elastic portion of a straight-line, downward-sloping demand curve corresponds to the segment above the midpoint. 
C) The inelastic portion of the demand curve corresponds to the segment above the midpoint. 
D) At the midpoint of the demand curve, the elasticity coefficient is zero.

Quizplus · Accepted Answer

The elastic portion of a straight-line, downward-sloping demand curve corresponds to the segment above the midpoint. This is because the elasticity coefficient (or absolute value of the slope of the demand curve) is greater than 1 in this segment, indicating that a small change in price leads to a relatively larger change in quantity demanded. Below the midpoint, the demand curve is inelastic, with an elasticity coefficient less than 1, indicating that a change in price has little effect on quantity demanded. Above the midpoint, the demand curve is elastic, with an elasticity coefficient greater than 1, indicating that a change in price has a larger effect on quantity demanded. The elasticity coefficient is not constant along the demand curve, and at the midpoint (where price and quantity are both halfway along the curve), the elasticity coefficient is equal to 1.

Figure 7-7 -Refer to Figure 7-7.Which of the Following Statements About Price