Elasticity Transitions on a Demand Curve

Steps:

• On a downward-sloping linear demand curve, price elasticity of demand is greater than 1 (elastic) in the upper portion and less than 1 (inelastic) in the lower portion.
• The midpoint represents unit elasticity; above it (higher price, lower quantity) is elastic; below it (lower price, higher quantity) is inelastic.
• Trace the curve: Points in the lower segment indicate inelastic demand due to flatter slope relative to the midpoint.
• Moving upward from a lower point to a higher point shifts from inelastic to elastic territory.

Why D is correct:

• Z to Y moves upward from the inelastic lower segment (Z) to the elastic upper segment (Y), per the elasticity rule for linear demand curves.

Why the others are wrong:

• A: W to X stays within the elastic upper segment, not crossing to inelastic.
• B: X to W reverses direction, moving from elastic to elastic without reaching inelastic.
• C: Y to Z moves downward from elastic to inelastic, opposite of the required direction.

Final answer: D