The text notes that, for any linear demand curve, demand is price elastic in the upper...

 

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The text notes that, for any linear demand curve, demand is price elastic in the upper half and price inelastic in the lower half. Consider the following demand curves: Panel (a) Panel (b) Price per unit ABCD 80 70 30 20 $100 2 0 378 10 Quantity per period UD EE Price per unit Demand Curve D1 [Panel Demand Curve D2 [Panel (a)] (b)] Price Quantity F G H The table gives the prices and quantities corresponding to each of the points shown on the two demand curves. $10 0 Price 8732 EF ●● Quantity per period Quantity 2828 20 30 GH D2 70 80 100 1. Compute the price elasticity of demand between points A and B and between points C and D on demand curve D,in Panel (a). Are your results consistent with the notion that a linear demand curve is price elastic in its upper half and price inelastic in its lower half? 2. Compute the price elasticity of demand between points E and F and between points G and H on demand curve D₂in Panel (b). Are your results consistent with the notion that a linear demand curve is price elastic in its upper half and price inelastic in its lower half? 3. Compare total spending at points A and B on D in Panel (a). Is your result consistent with your finding about the price elasticity of demand between those two points? 4. Compare total spending at points C and D on D in Panel (a). Is your result consistent with your finding about the price elasticity of demand between those two points? 5. Compare total spending at points E and F on D₂in Panel (b). Is your result consistent with your finding about the price elasticity of demand between those two points? 6. Compare total spending at points G and H on D₂in Panel (b). Is your result consistent with your finding about the price elasticity of demand between those two points? Answer with text and/or attachments: The text notes that, for any linear demand curve, demand is price elastic in the upper half and price inelastic in the lower half. Consider the following demand curves: Panel (a) Panel (b) Price per unit ABCD 80 70 30 20 $100 2 0 378 10 Quantity per period UD EE Price per unit Demand Curve D1 [Panel Demand Curve D2 [Panel (a)] (b)] Price Quantity F G H The table gives the prices and quantities corresponding to each of the points shown on the two demand curves. $10 0 Price 8732 EF ●● Quantity per period Quantity 2828 20 30 GH D2 70 80 100 1. Compute the price elasticity of demand between points A and B and between points C and D on demand curve D,in Panel (a). Are your results consistent with the notion that a linear demand curve is price elastic in its upper half and price inelastic in its lower half? 2. Compute the price elasticity of demand between points E and F and between points G and H on demand curve D₂in Panel (b). Are your results consistent with the notion that a linear demand curve is price elastic in its upper half and price inelastic in its lower half? 3. Compare total spending at points A and B on D in Panel (a). Is your result consistent with your finding about the price elasticity of demand between those two points? 4. Compare total spending at points C and D on D in Panel (a). Is your result consistent with your finding about the price elasticity of demand between those two points? 5. Compare total spending at points E and F on D₂in Panel (b). Is your result consistent with your finding about the price elasticity of demand between those two points? 6. Compare total spending at points G and H on D₂in Panel (b). Is your result consistent with your finding about the price elasticity of demand between those two points? Answer with text and/or attachments: