Answer to Question #102578 in Economics of Enterprise for vaneesha

Question

1. The two demand curves in Figure 5-7 in the textbook (p. 123) are linear demands parallel to each other.

a. Show that the demand curve for 1986 in Figure 5-7 is more elastic at every price than the demand curve in 1971. (2)
In figure 5-1 the elasticity at point 1 along the 1986 demand curve is A/B and the elasticity at point 2 on the 1971 demand curve is A/Bp. Since in both figures the distance A is the same, the 1986 demand curve is more elastic.


b. Show that the demand curve for 1986 in Figure 5-7 is less elastic at every quantity than the demand curve in 1971

Answer 1

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