Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Two columns are given- Column I and Column II , each having some statements. Match statements in column I to that in column II.



  List I   List II
i Horizontal demand curve a   Infinity price elasticity
ii Vertical demand curve b Zero price elasticity
iii Linear demand curve sloping downwards from left to right c Elasticity Varies
iv      Rectangular hyperbola shaped demand curve d Unit price elasticity

 

Options:

i-a, ii-b, iii-c, iv-d

i-a, ii-b, iii-d, iv-c

i-a, ii-c, iii-b, iv-d

i-b, ii-c, iii-a, iv-d

Correct Answer:

i-a, ii-b, iii-c, iv-d

Explanation:

Horizontal demand curve - where market price remains constant at P , whatever be the level of demand for the commodity. At any other price, quantity demanded drops to zero and therefore elasticity = infinity . A horizontal demand curve is perfectly elastic.

Vertical demand curve - Whatever be the price, the demand is given at the level q . A price never leads to a change in the demand for such a demand curve and |eD| is always 0. Therefore, a vertical demand curve is perfectly inelastic.

The elasticity of demand is different at different points on a linear demand curve. At p = 0, the elasticity is 0, at q = 0, elasticity is infinity etc.


Demand curve which has the shape of a rectangular hyperbola - this demand curve has a property that a percentage change in price along the demand curve always leads to equal percentage change in quantity. Therefore, |eD| = 1 (Unitary elastic) at every point on this demand curve.