In the following diagram, AE is the linear demand curve of a commodity. On the basis of the given diagram state whether the following statement is True or False. Give a reason for your answer.
Demand at point ‘C’ is relatively elastic demand.
Correct Statement: Demand at point ‘C’ is a relatively inelastic demand.
Reason: The length of the lower segment is less as compared to the upper segment at point C. Therefore, Ed < 1. Thus, at point C, demand is relatively inelastic.