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If two demand curve intersects, at their point of intersection which demand curve will be more elastic.

If two demand curve intersects, at their point of intersection which demand curve will be more elastic.

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 Elasticity at the Intersection of Demand Curves** In the study of economics, it's important to understand demand elasticity, which refers to how the quantity demanded of a good responds to changes in price. A question that often arises is: *If two demand curves intersect, which demand curve is more elastic at their point of intersection?* ### Explanation When two demand curves intersect, the elasticity of each curve at the intersection can be compared. The demand curve that is flatter, or less steep, at the point of intersection is considered to be more elastic. This is because a small change in price leads to a larger change in quantity demanded along a flatter curve, indicating greater sensitivity to price changes. ### Key Points 1. **Elastic Demand**: More responsive to price changes. Consumers will buy significantly more or less as the price decreases or increases, respectively. 2. **Inelastic Demand**: Less responsive to price changes. Consumers' buying habits are not as affected by price changes. Understanding the elasticity can help businesses and policymakers make better decisions regarding pricing strategies and anticipate changes in consumer behavior.
Transcribed Image Text:**Understanding Elasticity at the Intersection of Demand Curves** In the study of economics, it's important to understand demand elasticity, which refers to how the quantity demanded of a good responds to changes in price. A question that often arises is: *If two demand curves intersect, which demand curve is more elastic at their point of intersection?* ### Explanation When two demand curves intersect, the elasticity of each curve at the intersection can be compared. The demand curve that is flatter, or less steep, at the point of intersection is considered to be more elastic. This is because a small change in price leads to a larger change in quantity demanded along a flatter curve, indicating greater sensitivity to price changes. ### Key Points 1. **Elastic Demand**: More responsive to price changes. Consumers will buy significantly more or less as the price decreases or increases, respectively. 2. **Inelastic Demand**: Less responsive to price changes. Consumers' buying habits are not as affected by price changes. Understanding the elasticity can help businesses and policymakers make better decisions regarding pricing strategies and anticipate changes in consumer behavior.
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