The correct answer is: Price elasticity of demand will be greater than 1 at point A and less than 1 at point B.
Price elasticity of demand is a measure of how responsive consumers are to changes in the price of a good or service. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
A demand curve is a graph that shows the relationship between the price of a good and the quantity demanded of that good. A straight line demand curve is a type of demand curve that has a constant slope.
The price elasticity of demand is equal to 1 at point A on the demand curve NM. This means that a 1% increase in price will lead to a 1% decrease in quantity demanded.
The price elasticity of demand is less than 1 at point B on the demand curve RS. This means that a 1% increase in price will lead to a less than 1% decrease in quantity demanded.
In conclusion, the price elasticity of demand will be greater than 1 at point A and less than 1 at point B.
Here is a more detailed explanation of each option:
- Option A: Price elasticity of demand will be equal to 1 at point A and less than 1 at point B. This is the correct answer.
- Option B: Price elasticity of demand will be greater than 1 at point A and equal to 1 at point B. This is incorrect. The price elasticity of demand is equal to 1 at point A, but it is less than 1 at point B.
- Option C: Price elasticity of demand will be less than 1 at point A and greater than 1 at point B. This is incorrect. The price elasticity of demand is less than 1 at point A, and it is also less than 1 at point B.
- Option D: Price elasticity of demand will be greater than 1 at point A and less than 1 at point B. This is the correct answer.