For a straight-line downward-sloping demand curve, price elasticity of demand
A)increases as we move down along the demand curve from higher to lower prices.
B)decreases as we move down along the demand curve from higher to lower prices.
C)remains constant along the entire demand curve.
D)a or b depending on the actual slope of the demand curve

Question

Quizplus · Accepted Answer

For a straight-line demand curve, the price elasticity of demand decreases as we move down the curve from higher to lower prices. This is because the formula for elasticity considers both price and quantity changes; as price decreases and quantity increases, the proportionate change in quantity becomes smaller relative to the proportionate change in price, leading to lower elasticity values.

For a Straight-Line Downward-Sloping Demand Curve, Price Elasticity of Demand