GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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In the calculation of elasticity, there is error in case of
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Arc elasticity
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Point elasticity
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Both (a) and (b)
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None of these
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Explanation:
Detailed explanation-1: -As we explained above, arc elasticity is a concept based on finite changes in quantity demanded and price between two points on the demand curve. Point elasticity is a concept based on infinitesimal changes in quantity demanded and price from the point on the demand curve.
Detailed explanation-2: -The arc elasticity is used when there is not a general function for the relationship of two variables, but two points on the relationship are known. In contrast, calculation of the point elasticity requires detailed knowledge of the functional relationship and can be calculated wherever the function is defined.
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