Q.Write a short note on: Arc method

Necessaries must be consumed regardless of price, so their quantity demanded changes very little with price — their demand is inelastic. Answer: (b) Inelastic.

Price elasticity of demand measures the responsiveness of quantity demanded to a change in price. Demand is elastic when a small price change causes a large change in quantity, and inelastic when even a large price change causes only a small change in quantity.

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The statement is incorrect; a unitary elastic demand curve is a rectangular hyperbola, not vertical. Correct statement: 'The shape of unitary elastic demand curve is a rectangular hyperbola.'

The shape of a demand curve reflects its price elasticity:

• Unitary elastic demand (elasticity exactly equal to one) means a given percentage change in price causes an equal percentage change in quantity demanded, so total expenditure stays constant at every price. A curve that keeps price times quantity constant everywhere is a rectangular hyperbola.
• A vertical demand curve represents perfectly inelastic demand (elasticity = 0) — quantity demanded does not change at all when price changes.
• A horizontal demand curve represents perfectly elastic demand (elasticity = infinity). …

The correct answer is (c) Horizontal.

The shape of a demand curve reflects its price elasticity — a key topic in CHSE Odisha +2 Business Economics (aligned with the NCERT/CBSE curriculum).

• Downward sloping (a) is the shape of a normal demand curve with finite elasticity, not the perfectly elastic case.
• Vertical (b) represents perfectly inelastic demand (elasticity = 0), where quantity does not change with price.
• Horizontal (c) represents perfectly elastic demand (elasticity = infinity): at the ruling price consumers buy any amount, but a tiny rise in price reduces demand to zero. …