S P2-12 A P;=10 DFlat Dsteep Q3=50 Q=90 Qi=100 Consider demand curve Dsteep When the price is raised from P, to P2, the price elasticity of demand computed using the endpoint method is: B. P.
S P2-12 A P;=10 DFlat Dsteep Q3=50 Q=90 Qi=100 Consider demand curve Dsteep When the price is raised from P, to P2, the price elasticity of demand computed using the endpoint method is: B. P.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![**Price Elasticity of Demand: A Graphical Analysis**
Consider the supply and demand graph shown. The vertical axis (P) represents price, and the horizontal axis (Q) represents quantity. The graph features two demand curves, \( D_{Steep} \) and \( D_{Flat} \), and one supply curve, \( S \).
### Graph Details:
1. **Supply Curve (S)**: This is depicted as a red upward-sloping line.
2. **Demand Curve \( D_{Steep} \)**: This is the steeper of the two blue downward-sloping demand lines.
3. **Demand Curve \( D_{Flat} \)**: This is the flatter of the two blue downward-sloping demand lines.
4. **Equilibrium Point (A)**: This is the intersection of the supply curve \( S \) and both demand curves \( D_{Steep} \) and \( D_{Flat} \). The equilibrium price is \( P_1 = 10 \) and the equilibrium quantity is \( Q_1 = 100 \).
5. **Price Change to \( P_2 \)**: The price is raised from \( P_1 = 10 \) to \( P_2 = 12 \).
### Points of Interest:
- **Point B**: Located on \( D_{Steep} \) at a price level \( P_2 = 12 \) and quantity \( Q_2 = 90 \).
- **Point C**: Located on \( D_{Flat} \) at a price level \( P_2 = 12 \) and quantity \( Q_3 = 50 \).
### Analysis:
Consider the demand curve \( D_{Steep} \).
When the price increases from \( P_1 \) to \( P_2 \), the quantity demanded decreases from \( Q_1 = 100 \) to \( Q_2 = 90 \).
To compute the price elasticity of demand using the endpoint method, the formula is applied as follows:
\[
\text{Price Elasticity of Demand} = \frac{\text{Percentage Change in Quantity Demanded}}{\text{Percentage Change in Price}}
\]
Where:
- Percentage Change in Quantity Demanded = \( \frac{Q_2 - Q_1}{Q_1} \times 100 \)
- Percentage Change in Price = \( \frac{P_2 - P_](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd3b445b4-cac0-4f0d-9c18-1a4527eab73b%2F5b96edee-b06b-410d-9a9b-bf95dfc4c33a%2Feyqh07_processed.png&w=3840&q=75)
Transcribed Image Text:**Price Elasticity of Demand: A Graphical Analysis**
Consider the supply and demand graph shown. The vertical axis (P) represents price, and the horizontal axis (Q) represents quantity. The graph features two demand curves, \( D_{Steep} \) and \( D_{Flat} \), and one supply curve, \( S \).
### Graph Details:
1. **Supply Curve (S)**: This is depicted as a red upward-sloping line.
2. **Demand Curve \( D_{Steep} \)**: This is the steeper of the two blue downward-sloping demand lines.
3. **Demand Curve \( D_{Flat} \)**: This is the flatter of the two blue downward-sloping demand lines.
4. **Equilibrium Point (A)**: This is the intersection of the supply curve \( S \) and both demand curves \( D_{Steep} \) and \( D_{Flat} \). The equilibrium price is \( P_1 = 10 \) and the equilibrium quantity is \( Q_1 = 100 \).
5. **Price Change to \( P_2 \)**: The price is raised from \( P_1 = 10 \) to \( P_2 = 12 \).
### Points of Interest:
- **Point B**: Located on \( D_{Steep} \) at a price level \( P_2 = 12 \) and quantity \( Q_2 = 90 \).
- **Point C**: Located on \( D_{Flat} \) at a price level \( P_2 = 12 \) and quantity \( Q_3 = 50 \).
### Analysis:
Consider the demand curve \( D_{Steep} \).
When the price increases from \( P_1 \) to \( P_2 \), the quantity demanded decreases from \( Q_1 = 100 \) to \( Q_2 = 90 \).
To compute the price elasticity of demand using the endpoint method, the formula is applied as follows:
\[
\text{Price Elasticity of Demand} = \frac{\text{Percentage Change in Quantity Demanded}}{\text{Percentage Change in Price}}
\]
Where:
- Percentage Change in Quantity Demanded = \( \frac{Q_2 - Q_1}{Q_1} \times 100 \)
- Percentage Change in Price = \( \frac{P_2 - P_
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