For each of the regions listed in the following table, use the midpoint method to identify if the demand for this good is elastic (approximately) unit elastic, or inelastic.

True or False: The value of the price elasticity of demand is not equal to the slope of the demand curve.

Expert Solution

Ans. Between X and Y - unit elastic demand ( Ed = 1)

Between Y and Z - inelastic demand ( Ed = 0.78)

Between W and X - elastic demand ( Ed = 1.29 )

Ans. True, the value of the price elasticity of demand measures the ratio of the percentage change in the quantity demanded to a percentage change in the price of the commodity whereas the slope of the demand curve measures the ratio of change in quantity demanded to the change in the price of the commodity.

Note: Negative sign of the price elasticity denotes the negative relationship between price and quantity demand of the commodity.

Rahul Sunny answered 2 years ago

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