Compared to a steep demand curve, a flatter demand curve indicates

Compared to a steep demand curve, a flatter demand curve indicates

• A. Higher elasticity
• B. The same elasticity
• C. Lower elasticity
• D. Elasticity cannot be determined

Answer: (A)

The main idea is how the steepness of the demand curve relates to how responsive buyers are to price changes. Elasticity of demand measures how much quantity demanded changes when price changes, using percentage changes. A flatter demand curve means a given price change leads to a larger percentage change in quantity demanded, so the elasticity (in absolute value) is higher. Conversely, a steeper curve implies buyers respond less to price changes, giving a lower elasticity. So, compared to a steep curve, a flatter curve indicates greater responsiveness to price changes. For example, if price drops and quantity demanded increases a lot on a flatter curve, the elasticity value is larger; on a steeper curve, the same price drop would produce a smaller quantity change and a smaller elasticity.

The main idea is how the steepness of the demand curve relates to how responsive buyers are to price changes. Elasticity of demand measures how much quantity demanded changes when price changes, using percentage changes. A flatter demand curve means a given price change leads to a larger percentage change in quantity demanded, so the elasticity (in absolute value) is higher. Conversely, a steeper curve implies buyers respond less to price changes, giving a lower elasticity. So, compared to a steep curve, a flatter curve indicates greater responsiveness to price changes. For example, if price drops and quantity demanded increases a lot on a flatter curve, the elasticity value is larger; on a steeper curve, the same price drop would produce a smaller quantity change and a smaller elasticity.