Question

Compare the price elasticity of two straight line demand curves intersecting each other at the point of intersection.

Answer 1

Price elasticity of demand at the point of intersection will be more on a flatter curve D₂ than on a steeper curve D₁. [Hint: At the point of intersection, elasticity is measured by `(DeltaQ)/(DeltaP)` which is reciprocal of the slope of the demand curve (slope is given by `(DeltaP)/(DeltaQ)`) Reciprocal of the slope of the demand curve is higher in the case of a flatter curve D₂.]