4. Use the graphs shown below (Graph One and Graph Two) to answer these questions. Remember that the price elasticity of demand for a good can be written as a fraction with (% change in quantity demanded) in the numerator and (% change in price) in the denominator.See the two graphs below with two different calculated price elasticities of demand. Note also that Graph One shows a demand curve that is steeper than the demand curve shown in Graph Two.

A. Is the demand shown in Graph One elastic or inelastic? How do you know?

B. Is the demand shown in Graph Two elastic or inelastic? How do you know?

C. Explain how you can compare the (% change in Qd) to the (% change in Price) to determine if the demand is elastic or inelastic.

D. For the demand curve shown in Graph One, will an increase in price result in an increase or a decrease in total consumer spending of this good?For the demand curve shown in Graph Two, will an increase in price result in an increase or decrease in total consumer spending of this good? (Note that total consumer spending on a good can also be called total revenue.)

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