A Straight- Line Demand Curve with Negative Slope Intersects the Horizontal

question 88

Multiple Choice

A straight- line demand curve with negative slope intersects the horizontal axis at 100 tonnes per week. At the midpoint on the demand curve (corresponding to 50 tonnes per week) the price elasticity of demand is

• A) 1.0.
• B) 0.5.
• C) 0.
• D) unknown without more information.

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Definitions:

Positive Economics

A branch of economics that focuses on objective analysis and the description of how the economy functions, as opposed to normative economics that involves value judgments.

Normative Economics

An area of economics that makes assessments of economic fairness or desired economic outcomes and aims of public policy.

Consequences

The outcomes or effects resulting from a particular action or set of conditions.

Negative Relationship

A relationship between two variables, X and Y, in which a decrease in X is associated with an increase in Y and an increase in X is associated with a decrease in Y.