Answer:
Price (P) Quantity (Q) Total Expenditure (TE) 5 20 100 5 24 120 We know, Price \[\times \] Quantity = Total Expenditure or, Price \[\times \] 24 = 120 or, Price = 5 Now, \[{{e}_{d}}=\frac{\text{Percentage}\,\,\text{Change}\,\,\text{in}\,\,\text{quantity}}{\text{Percentage}\,\,\text{Change}\,\,\text{in}\,\,\text{price}}\] Percentage change in quantity \[=\frac{\Delta Q}{Q}\times 100=\frac{24-20}{20}\times 100=20%\] Percentage change in price \[=\frac{\Delta P}{P}\times 100=\frac{5-5}{20}\times 100=0\] Substituting the values in the formula of price elasticity of demand, \[{{e}_{d}}=\frac{20}{0}=\infty \] Thus, the demand is perfectly elastic. As the demand is perfectly elastic, so the demand curve is a horizontal straight line parallel to the quantity-axis. Hence, the likely shape of demand curve is parallel to the x-axis, i.e., perfectly elastic.
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