Question

In the following Question, read the following statement and choose the correct alternative among those given:

Statement 1: Flatter demand curve is more elastic at the point of intersection. 

Statement 2: Demand for a commodity with large number of substitutes is more elastic.

Options

• Both the Statements are true.

• Both the Statements are false.

• Statement 1 is true and Statement 2 is false.

• Statement 2 is true and Statement 1 is false.

Answer 1

Both the Statements are true.

Explanation:

At the intersection of demand curves, the flatter curve is more elastic because the same price change causes a larger change in quantity demanded. With many substitutes, buyers can switch more readily when price changes, making demand more elastic.