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 ‘D’ is perfectly inelastic demand.
Correct Statement: Demand at point ‘D’ is unitary elastic demand.
Reason: The length of the lower segment is equal to the upper segment at point D. Therefore, Ed = 1. Thus, at point D, demand is unitary elastic.