ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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0
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1
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1.5
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2
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Detailed explanation-1: -In the case of a straight-line demand curve meeting, the two Axes the price elasticity of demand at the midpoint of the line would be 1.
Detailed explanation-2: -At the midpoint of a linear demand curve, demand is unit price elastic.
Detailed explanation-3: -Straight line (linear) demand curve If the demand curve is linear (straight line), it has a unitary elasticity at the midpoint. The total revenue is maximum at this point. Any point above the midpoint has elasticity greater than 1, (Ed > 1). Here, price reduction leads to an increase in the total revenue (expenditure).
Detailed explanation-4: -Solution(By Examveda Team) In the case of a straight-line demand curve meeting the two axes, the price-elasticity of demand at the mid-point of the line would be 1.
Detailed explanation-5: -If a demand curve is perfectly vertical (up and down) then we say it is perfectly inelastic. If the curve is not steep, but instead is shallow, then the good is said to be “elastic” or “highly elastic.” This means that a small change in the price of the good will have a large change in the quantity demanded.