Why are linear demand curves elastic at the top and inelastic at the bottom?

This is because all linear demand curves contain portions on the curve which can be classed as elastic, inelastic and unit elastic. The bottom half of the curve is inelastic, because if the price rises – at any point below the midpoint – expenditure increases despite a quantity fall.

Why for a linear demand curve the price elasticity of demand is not represented by the slope of the demand curve?

For explaining that the gradient of a linear demand curve is constant along the curve. As price increases, the \% change in price diminishes while the \% change in quantity demanded increases. Therefore, the slope, which is constant, cannot represent the formula: PED = \%ΔQd / \%ΔP.

Why linear demand curve has no elasticity?

Even on a linear (straight) demand or supply curve, the elasticity is not constant for the whole curve. The reason for this is that we are measuring the percentage change in both price and quantity. That is, price elasticity is not measured in dollars or \%, it is simply a ratio.

Why is elasticity not the same as the slope?

This makes comparisons of elasticities, between goods measured in different units, or between countries with different currencies, much more meaningful than comparisons of slopes. The reason why elasticity is not defined as the slope of the graph is because the idea of slope is mathematically different from elasticity.

What does the price elasticity of demand depend on?

The four factors that affect price elasticity of demand are (1) availability of substitutes, (2) if the good is a luxury or a necessity, (3) the proportion of income spent on the good, and (4) how much time has elapsed since the time the price changed. If income elasticity is positive, the good is normal.

Is the elasticity of a linear demand curve equal to its slope explain?

Even though the slope of a linear demand curve is constant, the elasticity is not. This is true because the slope is the ratio of changes in the two variables, whereas the elasticity is the ratio of percentage changes in the two variables.

When demand is elastic and price increases what happens to both revenue and quantity?

If demand is elastic at a given price level, then should a company cut its price, the percentage drop in price will result in an even larger percentage increase in the quantity sold—thus raising total revenue.

When a demand curve is linear The elasticity is the same?

Why is elasticity different from slope?

ELASTICITY AND DEMAND SLOPE: The reason is that slope and elasticity are different concepts. Slope measures the steepness or flatness of a line in terms of the measurement units for price and quantity. Elasticity measures the relative response of quantity to changes in price.

How do you calculate demand elasticity?

The elasticity of demand formula is calculated by dividing the percentage that quantity changes by the percentage price changes in a given period. It looks like this: Therefore, the elasticity of demand is the percentage change in the quantity demanded as a result of a percentage change in the price of a product.

What does a perfectly elastic demand curve mean?

A perfectly elastic demand curve will be a straight line (horizontal) on a graph, where the x-axis will be the quantity, and the y-axis will be the price of the product. The market demand for a product is directly tied to the price of the product.

What is the perfect elastic demand curve?

Definition: A perfectly elastic demand curve is represented by a straight horizontal line and shows that the market demand for a product is directly tied to the price. In fact, the demand is infinite at a specific price.

When is a demand curve perfectly elastic?

If demand is perfectly elastic, it means that at a certain price demand is infinite (A good with a very high elasticity of demand). In other words, if a firm increased the price by 1\%, it would see all its demand evaporate. If demand is perfectly elastic, then demand will be horizontal.