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In case of a straight line demand curve meeting the two axes, the price elasticity of demand at the Y-axis of the line would be:
  • a)
    Infinity
  • b)
    Equal to 1
  • c)
    Zero
  • d)
    Less than 1
Correct answer is 'A'. Can you explain this answer?
Most Upvoted Answer
In case of a straight line demand curve meeting the two axes, the pric...
Price Elasticity of Demand at Y-axis

The Y-axis of a straight line demand curve represents the quantity demanded at a price of zero. At this point, the demand curve intersects the Y-axis. The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. At the Y-axis, the price is zero, and any change in price will result in an infinite percentage change. Therefore, the price elasticity of demand at the Y-axis of a straight line demand curve is infinite.

Explanation:

A straight line demand curve is a linear relationship between price and quantity demanded. It is represented by an equation of the form Q = a - bP, where Q is the quantity demanded, P is the price, and a and b are constants. The slope of the demand curve is equal to -b, which represents the rate of change of quantity demanded with respect to price.

At the Y-axis, the price is zero, and the quantity demanded is equal to a, which is the intercept of the demand curve. Any change in price from zero will result in an infinite percentage change in price. Therefore, the price elasticity of demand at the Y-axis of a straight line demand curve is infinite.

Conclusion:

In conclusion, the price elasticity of demand at the Y-axis of a straight line demand curve is infinite. This is because any change in price from zero will result in an infinite percentage change in price. Understanding the concept of elasticity of demand is crucial for businesses to make informed decisions about pricing strategies and product offerings.
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In case of a straight line demand curve meeting the two axes, the pric...
As moving upward towards the y-axis the price elasticity of demand increases
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In case of a straight line demand curve meeting the two axes, the price elasticity of demand at the Y-axis of the line would be:a)Infinityb)Equal to 1c)Zerod)Less than 1Correct answer is 'A'. Can you explain this answer?
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