Practicing Success
The elasticity of demand at midpoint C on a linear demand curve AB is equal to : |
one Zero Infinity Ten |
one |
The correct answer is option (1) : One 1. The reason the elasticity of demand at the midpoint of a linear demand curve is always unitary (equal to 1 ). 2. At the midpoint of a linear demand curve, the proportionate changes in price and quantity demanded from either side of the midpoint are equal. 3. Since the changes are equal and opposite in direction (price goes up, quantity goes down, or vice versa), their percentage changes will also be equal in magnitude but opposite in sign. When these equal percentage changes are divided, the result becomes 1 (positive divided by negative or vice versa). 3. Therefore, the elasticity of demand at the midpoint of a linear demand curve is always unitary, or in other words, equal to 1. |