Necessary cookies are absolutely essential for the website to function properly. One can verify this by using formula for measuring arc elasticity. To sum up, the demand curve for a commodity (X) is price elastic, unitary elastic or inelastic depending on whether the PCC is negatively, zero or positively sloped, respectively. Finally, in C the PCC slopes upward, total output on X falls and the demand for X is inelastic. Thus, the PCC is horizontal and demand for X is unitary price elastic. In part (b), a fall in P x leaves outlay (expenditure) on X unchanged. This gives a PCC that slopes downward, implying that the demand for X is price elastic. 10(a) shows that as P x falls, total outlay on X increases. 10: Price consumption curve amount of money spent on X. This means that the vertical distance from the point where the budget line meets the vertical axis to the point which corresponds to the optimum purchase by the consumers indicates the Fig. But, instead of measuring the quantity of good Y along the vertical axis, we now measure money spent on all goods other than X. The horizontal axis in each part of the diagram measures the quantity of good X purchased per period (as usual).
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