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If two negatively sloped demand curves intersect then
- a)Elasticity will be same throughout both
- b)Elasticity cannot be determined in this case
- c)The steeper will have higher elasticity
- d)The flatter will have higher elasticity
Correct answer is option 'D'. Can you explain this answer?
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If two negatively sloped demand curves intersect thena)Elasticity will...
flatter the curve more the elasticity,steeper the curve less the elasticity.
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If two negatively sloped demand curves intersect thena)Elasticity will...
Negatively sloped demand curves indicate an inverse relationship between price and quantity demanded. When two negatively sloped demand curves intersect, it means that at that point, the quantity demanded is the same for both curves. However, the price at that point may be different for each curve. This intersection point can help us analyze the elasticity of demand for each curve.
Explanation:
1. Definition of Elasticity:
- Elasticity of demand measures the responsiveness of quantity demanded to changes in price.
- It is calculated as the percentage change in quantity demanded divided by the percentage change in price.
2. Different Elasticities for Different Curves:
- Since the two demand curves intersect, they represent different price-quantity combinations at that point.
- The elasticity of demand is calculated at a specific point on the curve, so the elasticity can be different for each curve.
- The steepness of the demand curve determines the elasticity.
3. Steeper Curve:
- The steeper demand curve represents a more price-sensitive or elastic demand.
- If the steeper curve has a higher price at the intersection point, it suggests that a smaller change in price will result in a larger change in quantity demanded.
- This indicates a higher elasticity of demand for the steeper curve.
4. Flatter Curve:
- The flatter demand curve represents a less price-sensitive or inelastic demand.
- If the flatter curve has a lower price at the intersection point, it implies that a larger change in price will result in a smaller change in quantity demanded.
- This indicates a lower elasticity of demand for the flatter curve.
5. Conclusion:
- In the given scenario, the flatter curve will have a lower elasticity of demand compared to the steeper curve.
- The flatter curve is less responsive to price changes, while the steeper curve is more responsive.
- Therefore, option 'D' is the correct answer choice.
In summary, when two negatively sloped demand curves intersect, the flatter curve will have a lower elasticity of demand compared to the steeper curve. The steepness of the demand curve determines the responsiveness of quantity demanded to changes in price.
Explanation:
1. Definition of Elasticity:
- Elasticity of demand measures the responsiveness of quantity demanded to changes in price.
- It is calculated as the percentage change in quantity demanded divided by the percentage change in price.
2. Different Elasticities for Different Curves:
- Since the two demand curves intersect, they represent different price-quantity combinations at that point.
- The elasticity of demand is calculated at a specific point on the curve, so the elasticity can be different for each curve.
- The steepness of the demand curve determines the elasticity.
3. Steeper Curve:
- The steeper demand curve represents a more price-sensitive or elastic demand.
- If the steeper curve has a higher price at the intersection point, it suggests that a smaller change in price will result in a larger change in quantity demanded.
- This indicates a higher elasticity of demand for the steeper curve.
4. Flatter Curve:
- The flatter demand curve represents a less price-sensitive or inelastic demand.
- If the flatter curve has a lower price at the intersection point, it implies that a larger change in price will result in a smaller change in quantity demanded.
- This indicates a lower elasticity of demand for the flatter curve.
5. Conclusion:
- In the given scenario, the flatter curve will have a lower elasticity of demand compared to the steeper curve.
- The flatter curve is less responsive to price changes, while the steeper curve is more responsive.
- Therefore, option 'D' is the correct answer choice.
In summary, when two negatively sloped demand curves intersect, the flatter curve will have a lower elasticity of demand compared to the steeper curve. The steepness of the demand curve determines the responsiveness of quantity demanded to changes in price.
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If two negatively sloped demand curves intersect thena)Elasticity will be same throughout bothb)Elasticity cannot be determined in this casec)The steeper will have higher elasticityd)The flatter will have higher elasticityCorrect answer is option 'D'. Can you explain this answer?
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