Question 3: Slope and Elasticity (6 points).

Here is the Demand Curve ("Original Demand") for a certain product or service.At point A, the demand is neither elastic nor inelastic (Elasticity is about one).

Part (a) Draw a second Demand Curve (call it "New Demand") with these characteristics:

It is a Demand Curve

It is a straight line

With the New Demand, the quantity demanded at a price of $35 is 700 (that's where it crosses the Original Demand Curve)

The slope is different from the slope of the Original Demand curve.

There is no one correct answer:any line is ok as long as it has the above four characteristics.

Point A

Here is a line that you can move into position on the chart

Part (b) Is your curve, the New Demand, more Elastic___ or more Inelastic___ than the Original Demand?How can you tell?

answer and explanation here:

Part (c) With the New Demand Curve, comparatively how well off or badly off will the supplier be if his or her costs go up?Please explain.

answer and explanation here: