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Question
- Which method of measuring elasticity is used in above diagram? (1m)
- Mention the type of elasticity at point ‘C’? (1m)
- Find out the elasticity at point ‘D’ by applying formula (2m)
Solution
- The point method or geometric method is used for measuring elasticity in the given diagram.
- At point C, the demand is relatively inelastic.
- As per the point method or geometric method,
Ed = `"Lower segment of demand curve below a given point"/ "Upper segment of demand curve above a given point"`
Ed = `"L" /"U"`
At point D,
Ed = `"ED" /"AD"`
Ed = 1 (Since ED = AD)
The length of lower segment is equal to the length of the upper segment.
Therefore, Ed = 1. It means that at point D, the demand is unitary elastic
RELATED QUESTIONS
The price elasticity of demand on a linear demand curve at the X-axis is ______.
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Complete the correlation:
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Complete the correlation:
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Complete the correlation :
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Complete the correlation:
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