Are the following statements true or false? Explain your answers. Show
a. The elasticity of demand is the same as the slope of the demand curve. b. The cross-price elasticity will always be positive. c. The supply of apartments is more inelastic in the short run than the long run. a. The elasticity of demand is the same as the slope of the demand curve. False. Elasticity of demand is the percentage change in quantity demanded divided by the percentage change in the price of the product. In contrast, the slope of the demand curve is the change in quantity demanded (in units) divided by the change in price (typically in dollars). The difference is that elasticity uses percentage changes while the slope is based on changes in the number of units and number of dollars. b. The cross-price elasticity will always be positive. False. The cross-price elasticity measures the percentage change in the quantity demanded of one good due to a 1% change in the price of another good. This elasticity will be positive for substitutes (an increase in the price of hot dogs is likely to cause an increase in the quantity demanded of hamburgers) and negative for complements (an increase in the price of hot dogs is likely to cause a decrease in the quantity demanded of hot dog buns). c. The supply of apartments is more inelastic in the short run than the long run. True. In the short run it is difficult to change the supply of apartments in response to a change in price. Increasing the supply requires constructing new apartment buildings, which can take a year or more. Therefore, the elasticity of supply is more inelastic in the short run than in the long run. Disclaimer The questions posted on the site are solely user generated, Doubtnut has no ownership or control over the nature and content of those questions. Doubtnut is not responsible for any discrepancies concerning the duplicity of content over those questions. Solution : NO. Elasticity fo demand is not the same thing as the slope of a demand curve. Slope of a demand curve is the absolute change in price and qty. demanded and is measured as `DeltaP//DeltaQ`. <br> On the other hand, elasticity of demand will be different on different points of a curve, except when the curve is perfectly elastic and perfectly inelastic. Hence two are different. Slope of the curve may remain constant, but its elasticitly may be different. For example, slope of a straight line dd curve is uniform , but its elasticity is differnet at different points. Answer: True The price elasticity of demand(PED) for a commodity is the change in its quantity demanded(QD) when the price of the commodity rises/falls. Elasticity is calculated by taking the ratio of percentage change in price and percentage change in quantity. Whereas the slope of the demand curve depicts the steepness of the demand curve. The slope of a function is calculated by taking the ratio of absolute change in price and absolute change in quantity. So, elasticity measures the relative increase/decrease whereas slope measures the steepness. Elasticity can be determined by observing the slope of the curve because elasticity is the reciprocal of the slope multiplied by the ratio of price and quantity. Therefore, it can be concluded that slope and elasticity are closely related but they are not the same. So the given statement is true. The statement is not false because the slope is the measurement of change in absolute terms and elasticity is the measurement of change in relative terms. Recommended textbook solutions
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The slope of the demand curve shows the change in price associated with a 1 unit change in quantity demanded. The elasticity of demand is the percent change of quantity demanded associated with a 1% change in price.
Is elasticity the same as slope?The slope is not the same as the elasticity because the demand curve's slope depends upon the changes in P and Q. Whereas the elasticity depends upon the percentage change in P and Q. The only exceptions are the polar cases of completely elastic and inelastic demands.
Is the price elasticity of demand for a product the same as the slope of the demand curve for that product?The first term in that expression is just the reciprocal of the slope of the demand curve, so the price elasticity of demand is equal to the reciprocal of the slope of the demand curve times the ratio of price to quantity.
When the price elasticity of demand is equal to the demand curve?If the number is equal to 1, elasticity of demand is unitary. In other words, quantity changes at the same rate as price. Elasticity of demand is illustrated in Figure 1. Note that a change in price results in a large change in quantity demanded.
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The elasticity of demand is the same as the slope of the demand curve true or false
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