See Hint Price elasticity of demand is a measure used in economics to gauge the

Question

See Hint Price elasticity of demand is a measure used in economics to gauge the responsiveness of quantity demanded to a change in price Visualizing elasticity graphically is useful in understanding the relationship between elastic and inelastic demand. The graphs below show the demand curves for four goods or services with varying degrees of demand elasticity, Suppose, all at once, the prices of all four goods or services rise considerably. Judging by the demand curves shown, one would expect the quantity demanded for each good or service to respond differently to the sudden price spike Consider the goods and services below with their corresponding demand curve. Rank the following graphs in order from most elastic demand to most inelastic demand Goods and services (4 images) (Drag and drop into the 05/08 O Type here to search

Explanation / Answer

A demand is said to be most elastic or, perfectly elastic when the demand curve is horizontal.

A demand curve is said to be most inelastic or, Perfectly inelastic when the demand curve is vertical.

A demand curve is more elastic than the other when it is flatter than the other and a demand curve is more inelastic than other when the demand curve is relatively steeper than the other.

Here, Graph 4 represents a most elastic demand curve (because it graphs a horizontal demand line). Graph 3 shows relatively flatter demand line than Graph 2's demand curve. So, graph 3 is more elastic than Graph 2. Graph 2 shows an inelastic demand curve because the demand curve is steeper one. Graph 1 shows most inelastic or perfectly inelastic demand curve because, the demand line is vertical.

So, if we arrange the graphs in order from most elastic demand to most inelastic demand then the order should be - 4, 3, 2 and then 1.

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