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Chapter 5: Q.3 (page 129)

Why is the demand curve with constant unitary elasticity concave?

Short Answer

Expert verified

Because price decreases do not have the same absolute worth.

Step by step solution

01

Definition

Demand curve:

The demand curve will be a graph that depicts the link between the worth of a commodity or service and also the quantity demanded overtime. the value will display on the left vertical axis, and therefore the amount needed on the horizontal axis, in an exceedingly typical representation.

02

Explanation

Because the absolute value of price reductions is not equal, the demand curve with constant unitary elasticity is concave. The left side of the curve begins with high pricing, and as it descends toward the right side, prices reduce by decreasing amounts. This creates a curved, concave shape with a steeper demand slope on the left and a flatter demand slope on the right.

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Most popular questions from this chapter

What is the relationship between price elasticity and position on the demand curve? For example, as you move up the demand curve to higher prices and lower quantities, what happens to the measured elasticity? How would you explain that?

The equation for a supply curve is 4P = Q. What is the elasticity of supply as price rises from 3 to 4? What is the elasticity of supply as the price rises from 7 to 8? Would you expect these answers to be the same?

If demand is elastic, will shifts in supply have a larger effect on equilibrium quantity or on price?

If demand is inelastic, will shifts in supply have a larger effect on equilibrium price or on quantity?

Describe the general appearance of a demand or a supply curve with zero elasticity.
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