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D1 is flatter than D2. O Dz is flatter than D1. If the price changes from $5 to $10, the quantity demand changes from 100 to 90 on D1. O If the price changes from $5 to $10, the quantity demand changes from 100 to 90 on D2. If the price changes from $5 to $10, the quantity demand changes from 100 to 80 on D1. If the price changes from $5 to $10, the quantity demand changes from 100 to 80 on D2. If the price changes from $5 to $10, there is a bigger percentage change in quantity on D1. If the price changes from $5 to $10, there is a bigger percentage change in quantity on D2. Because there is a bigger percentage change in quantity on D1 than on D2 when the price changes from $5 to %10, the price elasticity of D1 is greater than the price elasticity on D2. Because there is a bigger percentage change in quantity on D2 than on D1 when the price changes from $5 to %10, the price elasticity of D2 is greater than the price elasticity on D1. The flatter the demand curve the higher the price elasticity and the more elastic demand is. The flatter the demand curve the lower the price elasticity and the more inelastic demand is.

D1 is flatter than D2. O Dz is flatter than D1. If the price changes from $5 to $10, the quantity demand changes from 100 to 90 on D1. O If the price changes from $5 to $10, the quantity demand changes from 100 to 90 on D2. If the price changes from $5 to $10, the quantity demand changes from 100 to 80 on D1. If the price changes from $5 to $10, the quantity demand changes from 100 to 80 on D2. If the price changes from $5 to $10, there is a bigger percentage change in quantity on D1. If the price changes from $5 to $10, there is a bigger percentage change in quantity on D2. Because there is a bigger percentage change in quantity on D1 than on D2 when the price changes from $5 to %10, the price elasticity of D1 is greater than the price elasticity on D2. Because there is a bigger percentage change in quantity on D2 than on D1 when the price changes from $5 to %10, the price elasticity of D2 is greater than the price elasticity on D1. The flatter the demand curve the higher the price elasticity and the more elastic demand is. The flatter the demand curve the lower the price elasticity and the more inelastic demand is.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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### Understanding Demand Curves Consider the 2 demand curves \(D_1\) and \(D_2\). #### Graph Description: The graph illustrates two downward-sloping demand curves, \(D_1\) and \(D_2\), plotted with Price (P) on the vertical axis and Quantity (Q) on the horizontal axis. - **Demand Curve \(D_1\) (Blue Line):** A steeper demand curve compared to \(D_2\), indicating how quantity demanded decreases as the price increases. - **Demand Curve \(D_2\) (Red Line):** A flatter demand curve indicating a different sensitivity to price changes compared to \(D_1\). #### Key Points on the Graph: - **Point A:** - Located at the intersection of \(D_2\) and the horizontal line representing Price (P) = $5. - Corresponds to a Quantity (Q) of 100 units. - **Point B:** - Located at the intersection of \(D_1\) and the horizontal line representing Price (P) = $10. - Corresponds to a Quantity (Q) of 80 units. - **Point C:** - Located at the intersection of \(D_2\) and the horizontal line at Price (P) = $10. - Corresponds to a Quantity (Q) of 90 units. #### Analysis of the Graph: - As the price decreases from $10 to $5: - On demand curve \(D_1\), the quantity demanded increases from 80 units to 100 units. - On demand curve \(D_2\), the quantity demanded increases from 90 units to 100 units. - This demonstrates that the responsiveness of quantity demanded to price changes (price elasticity of demand) varies between the two demand curves. - **Price Elasticity:** - For \(D_1\): Greater responsiveness is indicated as the quantity demanded changes more significantly with price changes. - For \(D_2\): Smaller changes in quantity demanded relative to price changes suggest lower price elasticity. ### Conclusion: The graph provided is a textbook example showcasing different demand curves and their corresponding price points and quantities. It helps illustrate the concept of price elasticity and how different products or markets may react differently to changes in price.
Transcribed Image Text:### Understanding Demand Curves Consider the 2 demand curves \(D_1\) and \(D_2\). #### Graph Description: The graph illustrates two downward-sloping demand curves, \(D_1\) and \(D_2\), plotted with Price (P) on the vertical axis and Quantity (Q) on the horizontal axis. - **Demand Curve \(D_1\) (Blue Line):** A steeper demand curve compared to \(D_2\), indicating how quantity demanded decreases as the price increases. - **Demand Curve \(D_2\) (Red Line):** A flatter demand curve indicating a different sensitivity to price changes compared to \(D_1\). #### Key Points on the Graph: - **Point A:** - Located at the intersection of \(D_2\) and the horizontal line representing Price (P) = $5. - Corresponds to a Quantity (Q) of 100 units. - **Point B:** - Located at the intersection of \(D_1\) and the horizontal line representing Price (P) = $10. - Corresponds to a Quantity (Q) of 80 units. - **Point C:** - Located at the intersection of \(D_2\) and the horizontal line at Price (P) = $10. - Corresponds to a Quantity (Q) of 90 units. #### Analysis of the Graph: - As the price decreases from $10 to $5: - On demand curve \(D_1\), the quantity demanded increases from 80 units to 100 units. - On demand curve \(D_2\), the quantity demanded increases from 90 units to 100 units. - This demonstrates that the responsiveness of quantity demanded to price changes (price elasticity of demand) varies between the two demand curves. - **Price Elasticity:** - For \(D_1\): Greater responsiveness is indicated as the quantity demanded changes more significantly with price changes. - For \(D_2\): Smaller changes in quantity demanded relative to price changes suggest lower price elasticity. ### Conclusion: The graph provided is a textbook example showcasing different demand curves and their corresponding price points and quantities. It helps illustrate the concept of price elasticity and how different products or markets may react differently to changes in price.
### Price Elasticity of Demand Quiz 1. □ **D1 is flatter than D2.** 2. □ **D2 is flatter than D1.** 3. □ **If the price changes from $5 to $10, the quantity demand changes from 100 to 90 on D1.** 4. □ **If the price changes from $5 to $10, the quantity demand changes from 100 to 90 on D2.** 5. □ **If the price changes from $5 to $10, the quantity demand changes from 100 to 80 on D1.** 6. □ **If the price changes from $5 to $10, the quantity demand changes from 100 to 80 on D2.** 7. □ **If the price changes from $5 to $10, there is a bigger percentage change in quantity on D1.** 8. □ **If the price changes from $5 to $10, there is a bigger percentage change in quantity on D2.** 9. □ **Because there is a bigger percentage change in quantity on D1 than on D2 when the price changes from $5 to $10, the price elasticity of D1 is greater than the price elasticity on D2.** 10. □ **Because there is a bigger percentage change in quantity on D2 than on D1 when the price changes from $5 to $10, the price elasticity of D2 is greater than the price elasticity on D1.** 11. □ **The flatter the demand curve, the higher the price elasticity, and the more elastic demand is.** 12. □ **The flatter the demand curve, the lower the price elasticity, and the more inelastic demand is.** ### Explanation: In this section, participants are prompted to consider the relationships and differences in price elasticity of demand between two demand curves, D1 and D2. The statements guide users through understanding how changes in price affect the quantity demanded and how this, in turn, influences price elasticity. This exercise aims to reinforce the concepts of price elasticity of demand, particularly the idea that elasticity can vary based on how steep or flat the demand curve is.
Transcribed Image Text:### Price Elasticity of Demand Quiz 1. □ **D1 is flatter than D2.** 2. □ **D2 is flatter than D1.** 3. □ **If the price changes from $5 to $10, the quantity demand changes from 100 to 90 on D1.** 4. □ **If the price changes from $5 to $10, the quantity demand changes from 100 to 90 on D2.** 5. □ **If the price changes from $5 to $10, the quantity demand changes from 100 to 80 on D1.** 6. □ **If the price changes from $5 to $10, the quantity demand changes from 100 to 80 on D2.** 7. □ **If the price changes from $5 to $10, there is a bigger percentage change in quantity on D1.** 8. □ **If the price changes from $5 to $10, there is a bigger percentage change in quantity on D2.** 9. □ **Because there is a bigger percentage change in quantity on D1 than on D2 when the price changes from $5 to $10, the price elasticity of D1 is greater than the price elasticity on D2.** 10. □ **Because there is a bigger percentage change in quantity on D2 than on D1 when the price changes from $5 to $10, the price elasticity of D2 is greater than the price elasticity on D1.** 11. □ **The flatter the demand curve, the higher the price elasticity, and the more elastic demand is.** 12. □ **The flatter the demand curve, the lower the price elasticity, and the more inelastic demand is.** ### Explanation: In this section, participants are prompted to consider the relationships and differences in price elasticity of demand between two demand curves, D1 and D2. The statements guide users through understanding how changes in price affect the quantity demanded and how this, in turn, influences price elasticity. This exercise aims to reinforce the concepts of price elasticity of demand, particularly the idea that elasticity can vary based on how steep or flat the demand curve is.
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