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Questions › JNU › JNU SIS 2014 › Q10
4 marks, −1Microeconomics › Demand theory and elasticity › Price elasticity of demandModerateabout 2 min

JNU SIS 2014 Question 10: Demand theory and elasticity

In a model with two goods, xxx and yyy, with xxx plotted on the horizontal axis, the price consumption curve generated by changing the price of xxx is parallel to the xxx-axis. This implies that

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In a model with two goods, x and y, with x plotted on the horizontal axis, the price consumption curve generated by changing the price of x is parallel to the x -axis. This implies that (A) the demand for x is infinitely elastic (B) the demand for y has zero elasticity (C) the demand for x has elasticity = -1 (D) the demand for y has elasticity = -1

Demand theory and elasticity has come up 161 times in 7 exams since 2004.

What this question tests

This question is on Price elasticity of demand, part of Demand theory and elasticity in Microeconomics.

How responsive quantity is to price, at a point, along a linear curve, and for constant-elasticity demand.

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