Question

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 ‘A’ is perfectly elastic demand.

On the basis of the given diagram, state whether the following statement is True or False: 

Demand at point ‘A’ is perfectly elastic demand.

Options

• True

• False

Answer 1

This statement is True.

Reason:

The length of the upper segment is 0 at point A. Therefore, Ed = ∞. Thus, at point A, demand is perfectly elastic.