Observe the following diagram of the non-linear demand curve and answer the questions given below.
(1) If \( EB = EA \) (\( Ed = 1 \)) = ....… (1) (2) If \( EB > EA \) (\( Ed > 1 \)) = ....... (1) (3) If \( EB < EA \) (\( Ed < 1 \)) = ....... (1) (4) The 'x' axis represents ........ of commodity and 'y' axis represents ........ of commodity. (1)
Show Hint
Elasticity of demand measures the responsiveness of quantity demanded to price changes: Ed > 1 for elastic demand, Ed < 1 for inelastic demand, and Ed = 1 for unitary elasticity.
Step 1: Understand the Diagram.
The given diagram represents a non-linear demand curve where the price is plotted on the y-axis and the quantity demanded on the x-axis. There is a point labeled "E" where the demand curve intersects a horizontal price line. Points "d" and "d₁" represent different demand points for the commodity.
Step 2: Answer the Questions.(1) If EB = EA (Ed = 1) = ........Answer:
When EB = EA, it implies that the price elasticity of demand (Ed) is 1. Therefore, at point E, the demand is **unitary elastic**.
So, the answer is:
\[
\boxed{Ed = 1 \; \text{(unitary elasticity)}}
\]
(2) If EB > EA (Ed > 1) = ........Answer:
When EB > EA, it implies that the price elasticity of demand (Ed) is greater than 1. This indicates **elastic demand** where the quantity demanded is highly responsive to price changes.
So, the answer is:
\[
\boxed{Ed > 1 \; \text{(elastic demand)}}
\]
(3) If EB < EA (Ed < 1) = .........Answer:
When EB < EA, it implies that the price elasticity of demand (Ed) is less than 1. This indicates **inelastic demand** where the quantity demanded is less responsive to price changes.
So, the answer is:
\[
\boxed{Ed < 1 \; \text{(inelastic demand)}}
\]
(4) The 'x' axis represents ......... of commodity and 'y' axis represents ........ of commodity.Answer:
The 'x' axis represents the **quantity demanded** of the commodity, and the 'y' axis represents the **price** of the commodity.
So, the answer is:
\[
\boxed{\text{Quantity demanded, Price}}
\]
