Observe the following diagram and answer the questions given below it :In the following diagram A E is the linear demand curve of a commodity. On the basis of the given diagram, state whether the following statements are true or false:[Figure: A stra…

Question

Q.5 (ii) Observe the following diagram and answer the questions given below it : In the following diagram A E is the linear demand curve of a commodity. On the basis of the given diagram, state whether the following statements are true or false: [Figure: A straight-line demand curve AE with price on the Y-axis and quantity demanded on the X-axis. A lies on the Y-axis and E on the X-axis. Points B, D and C are marked on the line in that order from A towards E; D is at the middle of AE, B lies between A and D, and C lies between D and E.] (1) Demand at point ‘C’ is relatively elastic demand. (1) (2) Demand at point ‘B’ is unitary elastic demand. (1) (3) Demand at point ‘D’ is perfectly inelastic. (1) (4) Demand at point ‘A’ is perfectly elastic demand. (1)

Doubtly AI · Accepted Answer

Answer: (1) False (2) False (3) False (4) True On a linear demand curve, elasticity at a point = lower segment ÷ upper segment. At the midpoint D, E_d = 1; above D, E_d > 1; below D, E_d < 1; at A (on the Y-axis) E_d = ∞; at E (on the X-axis) E_d = 0. False: C lies below the midpoint, so CE < CA and demand at C is relatively inelastic (E_d < 1). False: B lies above the midpoint, so BE > BA and demand at B is relatively elastic (E_d > 1). False: D is the midpoint, so DE = DA and demand at D is unitary elastic (E_d = 1). True: at A the upper segment is zero, so E_d = AE ÷ 0 = ∞, i.e. perfectly elastic.

Observe the following diagram and answer the questions given below it :In the following diagram A E is the linear demand curve of a commodity. On the basis of the given diagram, state whether the following statements are true or false:[Figure: A stra…

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