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If there are two demand curve intersecting each other, which demand curve has greater ealstictly of demand ? Explain. |
Answer» Solution :When two demand curve intersect each other, the flatter demand curve exhibits greater ELASTICITY of demand than the steeper one. Flatter demand curve shows that response of demand to change in PRICE is more on it as compared to the steeper demand curve. For example There are two demand cruves DD and `D_(1)D_(1)` which interset at POINT E, the qty. demand is same as OQ on both the demand curves. Due to fall in price, Qty. dmeanded changes . it is clear that response of demand to a change in price of the good is more on `D_(1)D_(1)` as compared to DD. Since `OQ_(2) gtOQ_(1)` We can say that flatter demand curve shows greater elasticity. 
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