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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. - Economics

MCQ
True or False

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.

Options

  • True

  • False

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Solution

False.

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.

Concept: Types of Price Elasticity of Demand
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APPEARS IN

Balbharati Economics 12th Standard HSC Maharashtra State Board
Chapter 3.2 Elasticity of Demand
Exercise | Q 7. (2)(1) | Page 36
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