Question

On the basis of graph given above answer next 5 questions.
At curve D $D_3$ elasticity is __________.

• A. $E_d>1$
• B. $E_d<1$
• C. $E_d=1$
• D. $E_d=\infty$

Answer 1

Answer: (C)

$E_d=1$

In the given curve x-axis shows quantity and y-axis shows price.

$\Rightarrow$ In given curve $D{D}_3$, we can see its line where quantity of demand and price changes equally.

$\Rightarrow$ The price elasticity of demand is the percentage change in the quantity demanded of a good or service divided by the percentage change in the price.

$\Rightarrow$ $E_d=\frac{\%changeinquantity}{\%changeinprice}$

Here,

% Change in quantity =% Change in price.

$\Rightarrow$ A unitary elasticity means that a given percentage change in price leads to an equal percentage change in quantity demanded or supplied.

$\therefore$ $E_d=1$