5. The variety of demand curves The following graph displays four demand curves (LL, MM, NN,…
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Question “5. The variety of demand curves The following graph displays four demand curves (LL, MM, NN,…”
5. The variety of demand
curves
The following graph displays four demand curves (LL, MM, NN, and
OO) that intersect at point A.
Answer
a) Between points A & B. The following statement is false. Curve LL is horizontally between A and B. It B, the curve LL can be described as unit elastic. This means the curve is not uni-elastic but perfectly elastic. tb) The curve NN between points A and B is inelastic. This is how it works: At point A, the price is 10 and the quantity is 10. Point D is where the price is 13 and the quantity is 8.
92-2. P-P 8-10 13-10 13+10 2 3 9 11.5 +0.85 This means that the curve has an elasticity of 0.85. The above statement is therefore true.
c) Ca Curve NN between points A-D is less elastic than curve MM between points C-D. The elasticity is 1.936. The statement is true because the elasticity between points A-D is less than the elastic demand between points A-C. The given statement is therefore true.
Conclusion
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