Demand
curve D1 [Panel
(a)]
Demand
curve D2 [Panel
(b)]
Price
Quantity
Price Quantity
A
80
2
E
8
20
B
70
3
F
7
30
C
30
7
G
3
70
D
20
8
H
2
80
1. Compute the price elasticity of demand between points A
and B and between points C and D on demand curve D1 in
Panel (a). Are your results consistent with the notion that a
linear demand curve is price elastic in its upper half and
price inelastic in its lower half?
2. Compute the price elasticity of demand between points E
and F and between points G and H on demand curve D2 in
Panel (b). Are your results consistent with the notion that a
linear demand curve is price elastic in its upper half and
price inelastic in its lower half?
3. Compare total spending at points A and B on D1 in Panel
(a). Is your result consistent with your finding about the
price elasticity of demand between those two points?
4. Compare total spending at points C and D on D1 in Panel
(a). Is your result consistent with your finding about the
price elasticity of demand between those two points?
5. Compare total spending at points E and F on D2 in Panel
(b). Is your result consistent with your finding about the
price elasticity of demand between those two points?
Attributed to Libby Rittenberg and Timothy Tregarthen
Saylor URL: />
Saylor.org
286