Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

D is the mid-point of the linear demand curve AB. Find the elasticity to the right of point D using geometrical method of measuring elasticity of demand.

Options:

More than 1

Less than 1

0 (zero)

∞ (infinity)

Correct Answer:

Less than 1

Explanation:

The correct answer is Option (2) → Less than 1

The elasticity of a linear demand curve can easily be measured geometrically. The elasticity of demand at any point on a straight line demand curve is given by the ratio of the lower segment and the upper segment of the demand curve at that point. 

The elasticity of demand at different points on a straight line demand curve can be derived by this method. Elasticity is 0 at the point where the demand curve meets the horizontal axis and it is ∝ at the point where the demand curve meets the vertical axis. At the midpoint of the demand curve, the elasticity is 1, at any point to the left of the midpoint, it is greater than 1 and at any point to the right, it is less than 1.