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Homework answers / question archive / The demand curves for good A and B are depicted in the following graph
The demand curves for good A and B are depicted in the following graph. We can conclude that Price A B Quantity the price elasticity of demand for good A is larger than good B. the price elasticity of demand for good A is smaller than good B good A is perfectly inelastic good A is perfectly elastic
Solution -
The answer will be option A i.e The price elasticity of demand for good A is larger than good B
when a good is elastic the percentage change in quantity is more than the percentage change in price.
Here in curve A the price elasticity is more than curve B because the same change in price leads to more change in quantity demanded in case of A .
Also a flatter demnd curve (curve A) is more elastic than the steeper one (curve B).
Hence The price elasticity of demand for good A is larger than good B .
