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 In 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:
  • a)
    0
  • b)
    1
  • c)
    1.5
  • d)
    2
Correct answer is 'B'. Can you explain this answer?
Verified Answer
In case of a straight line demand curve meeting the two axes, the pric...
A demand curve:

We plot quantity demanded against price. 

Since it is a straight line in this scenario, the demand is directly proportional to demand. 

Meaning at P = 1 Q = 1

Elasticity = P / Q

The answer is thus 1

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Most Upvoted Answer
In case of a straight line demand curve meeting the two axes, the pric...
Price Elasticity of Demand:

Price Elasticity of Demand refers to the degree of responsiveness of quantity demanded to a change in the price of the commodity.

Formula:

Price Elasticity of Demand = Percentage change in Quantity Demanded / Percentage change in Price

Types of Price Elasticity of Demand:

1. Perfectly Elastic Demand: When the value of price elasticity of demand is infinite, it is called perfectly elastic demand.

2. Perfectly Inelastic Demand: When the value of price elasticity of demand is zero, it is called perfectly inelastic demand.

3. Unitary Elastic Demand: When the value of price elasticity of demand is equal to one, it is called unitary elastic demand.

4. Relatively Elastic Demand: When the value of price elasticity of demand is greater than one, it is called relatively elastic demand.

5. Relatively Inelastic Demand: When the value of price elasticity of demand is less than one, it is called relatively inelastic demand.

Price Elasticity of Demand for Straight-Line Demand Curve:

A straight-line demand curve is one where the demand for a commodity is a linear function of its price. The price elasticity of demand for such a curve varies along its length. However, at the mid-point of the line, the price elasticity of demand is unitary, i.e. equal to one.

Explanation:

At the mid-point of the straight-line demand curve, the slope of the curve is maximum, and the price and quantity demanded are equal. Hence, the percentage change in price and quantity demanded is the same. Therefore, the price elasticity of demand at the mid-point of the line is equal to one.
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In case of a straight line demand curve meeting the two axes, the pric...
Here demand curve is straight means price is 1and quantity demand is also 1 p=1,q=1 elasticity=p÷q=1÷1=1
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In 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:a)0b)1c)1.5d)2Correct answer is 'B'. Can you explain this answer?
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