Multiple answers may be correct: D-Flat is elastic and D-Steep in inelastic D-Flat and D-Steep are both elastic. D-Flat and D-Steep are both inelastic. There is a bigger change in quantity to a change in price on D-Flat An increase in price will cause a decreae in total revnue/Expenditure when demand is inelastic. An increase in price will cause an increase in Total Revenue/Expenditre on D-Flat and a decrease on D-Steep.
Multiple answers may be correct: D-Flat is elastic and D-Steep in inelastic D-Flat and D-Steep are both elastic. D-Flat and D-Steep are both inelastic. There is a bigger change in quantity to a change in price on D-Flat An increase in price will cause a decreae in total revnue/Expenditure when demand is inelastic. An increase in price will cause an increase in Total Revenue/Expenditre on D-Flat and a decrease on D-Steep.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Multiple answers may be correct:
D-Flat is elastic and D-Steep in inelastic
D-Flat and D-Steep are both elastic.
D-Flat and D-Steep are both inelastic.
There is a bigger change in quantity to a change in price on D-Flat
An increase in price will cause a decreae in total revnue/Expenditure when demand is inelastic.
An increase in price will cause an increase in Total Revenue/Expenditre on D-Flat and a decrease on D-Steep.
Transcribed Image Text:### Supply and Demand Curve
The graph above illustrates the interplay between supply and demand curves, showcasing the effects of changes in supply and demand on equilibrium price and quantity. Here's a detailed breakdown of the graph's components:
#### Axes:
- **X-axis (Q)**: Represents the quantity of goods.
- **Y-axis (P)**: Represents the price level of the goods.
#### Lines:
- **S (Red Line)**: The upward-sloping supply curve.
- **D_Flat (Top Blue Line)**: A flatter demand curve.
- **D_Steep (Bottom Blue Line)**: A steeper demand curve.
#### Points and Intersections:
- **Point A**: The initial equilibrium, where the supply curve (S) intersects the flatter demand curve (D_Flat), at a quantity of \(Q_1 = 100\) and a price of \(P_1 = 10\).
#### Shifts and New Equilibria:
- **New Price Level \(P_2 = 12\)**: Represented by the horizontal red dotted line at \(P = 12\).
- **New Quantity Levels**:
- **\(Q_2 = 90\)**: New quantity associated with the flatter demand curve at the new price level \(P_2 = 12\).
- **\(Q_3 = 50\)**: New quantity associated with the steeper demand curve at the new price level \(P_2 = 12\).
- **Points B and C**:
- **Point B**: Intersection of the new price level \(P_2 = 12\) and the flatter demand curve \(D_Flat\), leading to quantity \(Q_2 = 90\).
- **Point C**: Intersection of the new price level \(P_2 = 12\) and the steeper demand curve \(D_Steep\), leading to quantity \(Q_3 = 50\).
#### Analysis:
- When the price level increases from \(P_1 = 10\) to \(P_2 = 12\), the quantity demanded decreases differently based on the slope of the demand curve.
- For the flatter demand curve (\(D_Flat\)), the quantity decreases from \(Q_1 = 100\) to \(Q_2 = 90\).
- For the steeper demand curve (\(D_Steep\
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