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Question
True or False with Reason:
Price Elasticity of Demand is infinity in case of horizontal straight line demand curve.
True or False
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Solution
This statement is true.
Explanation:
- A horizontal straight line demand curve has zero slope.
- Price elasticity of demand = (1 ÷ slope) × P/Q = (1 ÷ 0) × P/Q = infinity.
- Therefore, elasticity is infinite in case of a horizontal demand curve.
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