What will be the price elasticity of demand at mid point in case of a straight line demand curve that meets the end of the axis?
Answer & explanation
Correct answer: option 1
Point elasticity is the price elasticity of demand at a specific point on the demand curve instead of over a range of it. It can be measured by dividing lower segment by upper segment.
Price elasticity of demand = \(\frac{\text {Lower segment }}{\text { Upper segment}}\)
As, lower segment = upper segment (because it is the mid point of the demand curve that meets both the axis)
Ped = 1