Given that the four demand curves (pp, qq, rr, and ss) intersect at point v, which curve represents the most elastic demand at point v?

• A. rr
• B. pp
• C. ss
• D. qq

Answer: (A)

Verified step by step guidance

1. Recall that the price elasticity of demand measures how much the quantity demanded responds to a change in price, and it is defined as \(\varepsilon = \frac{\% \text{ change in quantity demanded}}{\% \text{ change in price}}\).
2. At the point where multiple demand curves intersect (point v), the price and quantity are the same for all curves, but their slopes differ, which affects elasticity.
3. Understand that elasticity at a point on a linear demand curve is given by \(\varepsilon = \frac{P}{Q} \times \frac{1}{|\text{slope}|}\), where \(P\) and \(Q\) are the price and quantity at the point, and slope is \(\frac{\Delta Q}{\Delta P}\).
4. Since \(P\) and \(Q\) are the same at point v for all curves, the curve with the smallest absolute slope (flattest curve) will have the highest elasticity because elasticity is inversely proportional to the slope's absolute value.
5. Identify which demand curve among pp, qq, rr, and ss has the flattest slope at point v; that curve represents the most elastic demand at that point.