# Observe the following figure and answer the questions

1) Identify and define the degrees of elasticity of demand from the following demand curves.

a. Perfectly inelastic demand.
b: Perfectly elastic demand
c: Unitary elastic demand
d: Relatiely elastic demand

2. In the following diagram, AE is the linear demand curve of a commodity. On the basis of the given diagram state whether the following statement is True or False. Give a reason for your answer.

1) Demand at point ‘C’ is relatively elastic demand.
Ans: True
Reason: – Demand at point ‘C’ is relatively elastic.

2) Demand at point ‘B’ is unitary elastic demand.
Ans: False
Reason: – Demand at point ‘B’ is relatively inelastic.

3) Demand at point ‘D’ is perfectly inelastic demand.
Ans: False
Reason: -Demand at point ‘D’ is unitary elastic demand.

4) Demand at point ‘A’ is perfectly elastic demand.
Ans: True
Reason: – Demand at point ‘A’ is perfectly elastic demand