Question : Assertion(A): Demand elasticity is greater than one below the demand curve's midpoint on a straight line with a downward slope.
Reason(R): The range of demand elasticity on a linear demand curve is zero to infinity.
Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A)
Option 2: Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
Option 3: Assertion (A) is true but Reason (R) is False
Option 4: Assertion (A) is False but Reason (R) is True
Correct Answer: Assertion (A) is False but Reason (R) is True
Solution :
Elasticity is less than one below the midpoint of a straight-line demand curve, and the firm wishes to raise prices to boost overall revenue. Elasticity is larger than one above the midpoint, and the company wants to cut prices to boost overall revenue. E1 is equal to one, or unit elastic, at the midpoint.
It varies from zero to infinity.
Hence option d is the correct answer.
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