The demand curve for good X is a straight downward-sloping line. It follows that the demand for good X is ________ elastic at __________ prices than at __________ prices.
A)less; lower; higher
B)more; lower; higher
C)more; higher; lower
D)less; higher; lower
E)a and c

Question

Quizplus · Accepted Answer

The demand curve for good X is a straight downward-sloping line. This means that as the price of good X increases, the quantity demanded of good X decreases. The elasticity of demand measures the responsiveness of the quantity demanded to changes in price. A more elastic demand curve means that the quantity demanded is more responsive to changes in price. A less elastic demand curve means that the quantity demanded is less responsive to changes in price. At lower prices, the demand for good X is more elastic because consumers are more likely to substitute away from good X to other goods. At higher prices, the demand for good X is less elastic because consumers are less likely to substitute away from good X to other goods.

The Demand Curve for Good X Is a Straight Downward-Sloping