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WAEC Economics 1992 Question 20

Question 20

Elasticity

The diagram above illustrates

Diagram for this question
  1. A.perfectly elastic demand
  2. B.inelastic demand
  3. C.perfectly inelastic demand
  4. D.elastic demand
  5. E.unitary elasticity of demand.
Show the answer and explanation

Answer: D (elastic demand)

Explanation

Price falls from 10 to 8 (20%) while quantity rises from 20 to 30 (50%); quantity changes more than price, so demand is elastic. Total revenue also rises from 200 to 240.