![]() If the demand curve intersects the y axis we can judge it as being an elastic demand curve as we must be focusing on the top half of the demand curve. ![]() Therefore, the easiest way to determine an elastic demand curve is to extend the section of the demand curve drawn and identify which axis it intersects. ![]() The top half of the curve is elastic, because if the prices rises - at any point above the midpoint - expenditure decreases due to a large quantity fall. The bottom half of the curve is inelastic, because if the price rises - at any point below the midpoint - expenditure increases despite a quantity fall. So effectively we can see that the midpoint of the demand curve is when unitary elasticity is achieved. Any demand curve shown (like the one below) is just a section of a much larger demand curve that extends beyond the axis. This is because all linear demand curves contain portions on the curve which can be classed as elastic, inelastic and unit elastic. Crucially, it is the position of the demand curve that determines elasticity. ![]() To identify the shape of an elastic linear demand curve we do not focus on the gradient of the curve as this does not actually determine elasticity. In this case the PED elasticity value will lie between 1 and infinity. When the percentage change in demand is greater than the percentage change in price. ![]()
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