If price consumption curve will be horizontal on x-axes then elasticity of demand will be:___________?
Correct answer: A. Equal to 1
- A. Equal to 1
- B. Greater than 1
- C. Less than 1
- D. Equal to 0
Explanation
A horizontal price-consumption curve implies that the quantity response to price changes keeps total expenditure on the good proportional to price, giving unitary elasticity. Therefore, elasticity of demand equals 1.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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