Measure Price Elasticity of Demand on the following points of a straight line demand curve : (a) Centre point of the demand curve. (b) Demand curve intercepting y-axis (c) Demand curve intercepting x-axis.
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Answer:
On a straight line, Point elasticity method is used.
The formula is Lower Segment/Upper Segment.
a.) At the centre :- LS/US = 1. ( because LS = US.)
So, elasticity is 1.
b.) At Y-intercept :- LS/US = infinity. ( because US is 0 )
So, elasticity is infinity.
c.) At X-intercept :- LS/US = 0. ( because LS = 0. )
So, elasticity is 0.
I hope this is helpful
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