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Q. 7. Observe the following figure and answer the 2) In the following diagram AE is the linear
questions : demand curve of a commodity. On the basis of
1) Identify and define the degrees of elasticity of the given diagram state whether the following
demand from the following demand curves. statements are True or False. Give reasons to
a) b) your answer.
Y D Y
Y
A
Price Price
Price D
D D B
D
0 X 0 X C
Quantity Demanded Quantity Demanded E
0 X
c) d)
Y Y Quantity Demanded
1) Demand at point ‘C’ is relatively elastic
Price P D P Price D demand.
2) Demand at point ‘B’ is unitary elastic demand.
D D
P 1 P 1
3) Demand at point ‘D’ is perfectly inelastic
0 Q Q 1 X 0 Q Q 1 X demand.
Quantity Demanded Quantity Demanded 4) Demand at point ‘A’ is perfectly elastic demand.
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