Question

What is the price elasticity of demand on the mid-point of the straight line demand curve starting from Y-axis and terminating at X-axis?

Options

• e_p > 1

• e_p < 1

• e_p = 0

• e_p = 1

Answer 1

e_p = 1

Explanation:

When a given percentage change in the price of a commodity causes an equivalent percentage change in the quantity demanded, then the elasticity of demand is said to be unitary (or one).