Question

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.

Answer 1

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