Multiple choice

Directions: Read the passage given below and answer question based on your understanding of the passage.

Given any segment of the demand curve, any change in price within that segment, will Leave the total expenditure of the consumer unchanged. if and only if the are elasticity is equal to unity. Further, any intermediate change in price will also leave the total expenditure of the consumer unchanged, if point elasticity is at each point at the demand curve is equal to unity.

If elasticity of a non-linear demand curse remains constant throughout, the slope of the curve will:

  1. be positive

  2. remain unchanged

  3. vary from point to point

  4. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A non-linear demand curve with constant elasticity must be a rectangular hyperbola of the form P = k/Q^e. Even though elasticity (e) is constant, the slope (dP/dQ = -ek/Q^(e+1)) varies at each point because Q changes. The curve's steepness changes along its length, so the slope is not uniform despite constant elasticity.

Keep practicing — related questions