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From the data in Table 5.5 about

Calculate the elasticity of demand at various points on the demand curve and classify them as inelastic, unit elastic and elastic.

## Answer to Problem 1SCQ

Price elasticity of demand from point B to C is 0.5

The price elasticity of demand at point D to E is 0.75

The price elasticity of demand at point G to H is 1.32.

### Explanation of Solution

**Let’s calculate the price elasticity of demand from point B to C:**

Therefore, the price elasticity of demand from point B to C is 0.5. Since the elasticity of demand is less than 1, the demand is inelastic, which means there is less change in quantity demanded as compared to the change in price level.

**Now, we find out the price elasticity of demand at point D to E:**

Therefore, the price elasticity of demand from point D to E is 0.75. Since the elasticity of demand is less than 1, the demand is inelastic, which means there is less change in quantity demanded as compared to the change in price level.

**Now, we find out the price elasticity of demand at point G to H:**

Therefore, the price elasticity of demand from point G to H is 1.32, since the elasticity of demand is greater than 1; the demand is elastic, which means there is large change in quantity demanded as compared to the change in price level.

Price elasticity of demand: The degree of responsiveness to change in quantity demanded due to change in its price. The formula for calculating elasticity of demand is as follows:

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# Chapter 5 Solutions

Principles of Economics 2e

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