Question

What is price elasticity of demand on the following demand curves:- a) Straight line parallel to X- axis b) Straight line parallel to Y-axis C) on the midpoint of a straight line dd curve

Answer 1

Answer:

Explanation: The price elasticity of demand is defined as the percentage change in quantity divided by the percentage change in price. Or, mathematically, we get:

is shorthand for "percent change in price", where the Greek letter delta denotes the change in something. This equation is also called “endpoint” elasticity.

We use this format (a percentage change divided by a percentage change) because it conveniently lets us work in a dimensionless world. If we instead looked at absolute changes in quantity and absolute changes in price, our results would have to have dimensions, such as “pounds of oranges per thousand dollars” or “cars per million Euros.” Instead, when comparing a percentage change in one thing to a percentage change in another, we avoid the confusion of what units we should be using.

A Perfectly Inelastic Demand Curve is vertical (η = 0). This is very rare in reality. You could claim that the elasticity of life-saving medical treatment is perfectly inelastic, since most of us would give anything and everything to stay alive.

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Answer 2

Answer -

1st case -

1. Price elasticity of demand curve parallel to x- axis is equal to infinity .

It is also called perfectly elastic demand.

This curve is called horizontal straight line demand curve.

We know that the slope of a horizontal straight line = 0

$\sf{\implies E_d = \frac{1}{Slope} \times \frac{P}{Q} }$

$\sf{\implies E_d = \frac{1}{0} = \:infinity}$

2nd case :-

2. Price elasticity of demand parallel to y- axis is equal to 0

It is also called perfectly inelastic demand .

This curve is called vertical straight line demand curve.

We know that slope of a vertical straight line is infinity .

$\sf{\implies E_d = \frac{1}{Slope} \times \frac{P}{Q} }$

$\sf{\implies E_d = \frac{1}{infinity} = \: 0}$

3rd case -

→ On mid point of straight line curve it is equal to 1 .

Here demand is equivalent to unity.