CA Foundation Exam  >  CA Foundation Questions  >  In case of straight line demand curve meeting... Start Learning for Free
In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______
  • a)
    Zero.
  • b)
    Greater than one
  • c)
    Less than one
  • d)
    Infinity
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
In case of straight line demand curve meeting two axis, the price elas...
The slope of a straight-line demand curve, one with a constant slope, has constantly changing elasticity. ... No two points on a straight-line demand curve have the same elasticity. The price elasticity of demand is different at each point on a demand curve with constant slope.
View all questions of this test
Most Upvoted Answer
In case of straight line demand curve meeting two axis, the price elas...
Price Elasticity of Demand at the Point of Intersection

When a straight line demand curve meets two axes, the price elasticity of demand at the point where the curve meets the Y-axis would be infinity. This is because:

- At this point, the price of the good is zero. Therefore, any increase in price would result in an infinite percentage change in price, causing the quantity demanded to drop to zero. Hence, the demand is perfectly elastic at this point.
- Mathematically, the price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price. When the price is zero, any percentage change in price would result in an infinite percentage change, making the denominator zero. Therefore, the price elasticity of demand would be infinity.

Implications of Perfectly Elastic Demand

A perfectly elastic demand curve has several implications for the market:

- The market is highly competitive, with many firms producing identical goods.
- Firms have no market power to influence the price, as buyers can easily switch to other suppliers if they raise their prices.
- The price elasticity of demand is infinite, meaning that buyers are extremely sensitive to changes in price.
- The marginal revenue for each additional unit sold is equal to the price, as the firm cannot charge a higher price without losing all its customers.
- The firm's supply curve is a horizontal line at the market price, as it can sell any quantity at that price.

Examples of Perfectly Elastic Demand

Some examples of goods with perfectly elastic demand include:

- Agricultural commodities, such as wheat, rice, and soybeans, where many farmers produce the same crops, and buyers can easily switch to alternative sources if the price rises.
- Digital goods, such as e-books, software, and music downloads, where the production costs are minimal, and the supply is virtually infinite.
- Goods with close substitutes, such as generic medicines, store-brand products, and off-brand electronics, where buyers can easily switch to similar goods if the price of a particular brand increases.
Free Test
Community Answer
In case of straight line demand curve meeting two axis, the price elas...
This is based on law of demand concept and graph is drawn shows that at infinity point of price the demand is almost zero
Explore Courses for CA Foundation exam
In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______a)Zero.b)Greater than onec)Less than oned)InfinityCorrect answer is option 'D'. Can you explain this answer?
Question Description
In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______a)Zero.b)Greater than onec)Less than oned)InfinityCorrect answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______a)Zero.b)Greater than onec)Less than oned)InfinityCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______a)Zero.b)Greater than onec)Less than oned)InfinityCorrect answer is option 'D'. Can you explain this answer?.
Solutions for In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______a)Zero.b)Greater than onec)Less than oned)InfinityCorrect answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation. Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______a)Zero.b)Greater than onec)Less than oned)InfinityCorrect answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______a)Zero.b)Greater than onec)Less than oned)InfinityCorrect answer is option 'D'. Can you explain this answer?, a detailed solution for In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______a)Zero.b)Greater than onec)Less than oned)InfinityCorrect answer is option 'D'. Can you explain this answer? has been provided alongside types of In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______a)Zero.b)Greater than onec)Less than oned)InfinityCorrect answer is option 'D'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice In case of straight line demand curve meeting two axis, the price elasticity of demand at the point where the curve meets Y-axis would be _______a)Zero.b)Greater than onec)Less than oned)InfinityCorrect answer is option 'D'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
Explore Courses for CA Foundation exam

Top Courses for CA Foundation

Explore Courses
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev