Question

The table below shows monthly individual consumer demand schedule for gasoline. Without calculating the price elasticity of demand coefficients find out on which portion of the curve demand is elastic and on which portion it is inelastic. Prove the answers with corresponding calculations in the blank table column below.

Points	Price/gallon ($)	Qd (gallons)	Corresponding Calculations
A	6	20
B	5	38
C	4	54
D	3	72
E	2	95
F	1	120

Portion AB (underline the appropriate answer): elastic, inelastic, unit-elastic

Portion BC (underline the appropriate answer): elastic, inelastic, unit-elastic

Portion CD (underline the appropriate answer): elastic, inelastic, unit-elastic

Portion DE (underline the appropriate answer): elastic, inelastic, unit-elastic

Portion EF (underline the appropriate answer): elastic, inelastic, unit-elastic

Answer 1

Segment	Points	Price/gallon ($) (P)	Qd(gallons)	Corresponding Calculations (TR=P*Q)	Remarks
	A	6	20	120
AB	B	5	38	190	Decrease in price has increased revenue. The demand is Elastic.
BC	C	4	54	216	Decrease in price has increased revenue. The demand is Elastic.
CD	D	3	72	216	Decrease in price has not increased revenue. The demand is Unit Elastic
DE	E	2	95	190	Decrease in price has decreased revenue. The demand is Inelastic
EF	F	1	120	120	Decrease in price has decreased revenue. The demand is Inelastic

If the demand is elastic, an increase in price will reduce revenues and decrease in price will increase revenues. Similarly if the demand is inelastic, an increase in price will increase revenues and decrease in price will reduce revenues.