When comparing elasticities between two different linear demand curves

When comparing elasticities between two different linear demand curves, the curve that is flatter has greater price elasticity at every given price.

Indicate whether the statement is true or false

 

ANSWER

False. This statement confuses slope with elasticity. Elasticity is calculated by multiplying the slope times (p/Q). As a result, the vertical intercept (along the price axis) is the key to elasticity. The curve with the lower intercept will be more price elastic at every given price.

 

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