At the other end, near QM (the most consumers will want even if the good is free), a change
in quantity is a small percentage of the total. However, since price
is near zero, a change in price is a large percentage. Therefore, the elasticity will be a small number, meaning that demand
is inelastic.
We'll leave it to you to prove that elasticity is exactly 1 at
the midpoint of the demand curve, but it's fairly easy if you recall
your algebra.
Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved