ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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On a linear demand curve, all the five forms of elasticity can be depicted’
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If two demand curves are linear and intersecting each other then coefficient of elasticity would be same on different demand curves at the point of intersection.
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If two demand curves are linear, and parallel to each other then at a particular price the coefficient of elasticity would be different on different demand curves
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The price elasticity of demand is expressed in terms of relative not absolute, changes in Price and quantity demanded’
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Detailed explanation-1: -Answer: Option (b) If two demand curves are linear and intersecting each other then coefficient of elasticity would be same on different demand curves at the point of intersection.
Detailed explanation-2: -Hence, we can conclude that ‘If the price of a substitute good increases, the demand curve shifts to the left’ is not a correct statement.
Detailed explanation-3: -The correct answer is a on a linear demand curve. All of the five forms of elasticity can be depicted.
Detailed explanation-4: -So two linear and parallel demand curves will have the same coefficient of elasticity and the changes in price w.r.t changes in quantity demanded will be the same. Hence, B is the correct option.
Detailed explanation-5: -If two demand curves intersect each other then the curve which is relatively flatter will have a higher price elasticity. This is because flatter the demand curve, greater is the change in demand due to change in price.