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One of the most important concepts in marketing is the price elasticity of demand, which is the:
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4. Elasticity
Price Elasticity of Demand on a Graph
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On a linear demand curve, which point corresponds to unit elastic demand?
A
Any point above the midpoint
B
The upper end of the demand curve
C
The midpoint of the demand curve
D
The lower end of the demand curve
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Recall that the price elasticity of demand measures the responsiveness of quantity demanded to a change in price, and it varies along a linear demand curve.
Understand that on a linear demand curve, elasticity is not constant; it changes from elastic to inelastic as you move down the curve.
Identify that the midpoint of a linear demand curve is the point where the price elasticity of demand equals exactly 1, meaning demand is unit elastic at this point.
Recognize that above the midpoint, demand is elastic (elasticity greater than 1), and below the midpoint, demand is inelastic (elasticity less than 1).
Therefore, the point corresponding to unit elastic demand on a linear demand curve is the midpoint of the demand curve.
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