Three points along a linear demand curve are shown in this graph.

What statement about these points is true?
Choose 1 answer:
(A) All three points have the same value of elasticity since the $s$ this curve is constant.
(B) The price elasticity of demand cannot be compared for these points without more information.
(c) Point 3 has the highest price elasticity.
(D) Point 1 has the highest price elasticity of the three points.
(E) Point 1 and 3 have elastic price elasticities, but point 2 is pric inelastic.
Related content
Introduction to price elasticity of demand

Question

Three points along a linear demand curve are shown in this graph.

What statement about these points is true?
Choose 1 answer:
(A) All three points have the same value of elasticity since the $s$ this curve is constant.
(B) The price elasticity of demand cannot be compared for these points without more information.
(c) Point 3 has the highest price elasticity.
(D) Point 1 has the highest price elasticity of the three points.
(E) Point 1 and 3 have elastic price elasticities, but point 2 is pric inelastic.
Related content
Introduction to price elasticity of demand

Accepted Answer

∻Solution∻ ‖ a ⋮ Definition of Price Elasticity of Demand: Price elasticity of demand (PED) measures the responsiveness of the quantity demanded of a good to a change in its price. It is calculated using the formula: $PED = \frac{\% \Delta Q_d}{\% \Delta P}$ ‖ ‖ b ⋮ Elasticity on a Linear Demand Curve: On a linear demand curve, the price elasticity of demand varies along the curve. The upper part of the demand curve is more elastic, while the lower part is more inelastic. ‖ ‖ c ⋮ Point 1 Analysis: Point 1 is at the top of the demand curve, where the price is high and quantity demanded is low. This region is typically more elastic. ‖ ‖ d ⋮ Point 3 Analysis: Point 3 is at the bottom of the demand curve, where the price is low and quantity demanded is high. This region is typically more inelastic. ‖ ‖ e ⋮ Conclusion: Based on the position of the points on the demand curve, Point 1 has the highest price elasticity of the three points. ‖ ∻Answer∻ ⚹ (D) Point 1 has the highest price elasticity of the three points. ⚹ ∻Key Concept∻ ⚹ Price elasticity of demand varies along a linear demand curve, being more elastic at higher prices and less elastic at lower prices. ⚹ ∻Explanation∻ ⚹ Point 1 is at the higher price end of the demand curve, where the demand is more elastic, while Point 3 is at the lower price end, where the demand is more inelastic. ⚹◊What formula can be used to calculate price elasticity of demand?⍭ Generate me a similar question◊

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