Chapter 5, Problem 1.1P

To determine

Slope of a demand curve.

Explanation of Solution

The general formula to calculate slope is given below:

$\text{Slope}=\frac{{\text{Present value}}_{\text{y variable}}-{\text{Previous value}}_{\text{y variable}}}{{\text{Present value}}_{\text{x variable}}-{\text{Previous value}}_{\text{x variable}}}$ (1)

Substitute the respective values in Equation (1) to calculate the slope of the demand curve of hamburgers.

$\begin{array}{c}\text{Slope}=\frac{\left(5-3\right)}{(10-20)}\\ =\frac{2}{\left(-10\right)}\\ =-0.2\end{array}$

Therefore, the slope is -0.2.

Substitute the respective values in Equation (1) to calculate the slope of the demand curve of hamburgers as shown below:

$\begin{array}{c}\text{Slope}=\frac{\left(500-300\right)}{(10-20)}\\ =\frac{200}{\left(-10\right)}\\ =-20\end{array}$

Therefore, the slope is -20

The slope is not a good measure of responsiveness because the slope changes when the units of measurement change. Here, the slopes of two curves are different and both curves show the same behavior. Slopes show behaviors as well as responsiveness of variables, but it cannot be said that slope is a good measurement.

Economics Concept Introduction

Slope: A slope of the demand curve shows that whether the relationship between variables is positive or negative, and the volume of responsiveness.