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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