Question

4 of 50 (3 complete)

Answer 1

Answer:

• The slope of the demand curve at point A is   - $0.40/unit

• The slope of the demand curve at point B is     - $0.14/unit

Explanation:

See the file attached with the figure corresponding to this question.

The slope of a curve at a given point is the slope of the line tangent to the curve at that point.

Point A:

The tangent line to the demand curve at point A is drawn and passes through the points (20, 34) and (45, 24).Then, the slope is:

• slope = rise / run = ΔP / Δq = $ (34 - 24) / (20 - 45) units

• slope = - $10 /25units = - $2/5units = - $0.40/unit.

The minus sign indicates the that price decreases when the quantity increases

Point B:

The tangent line to the demand curve at point B passes through the points (90, 12) and (140, 5).Then, the slope is:

• slope = rise / run = ΔP / Δq = $ (12 - 5) / (90 - 140) units

• slope = - $7 /50units = - $7/50units = - $0.14/unit.

Again, the negative sign indicates that when the number of units increase the price decreases.