-The figure above illustrates a linear demand curve. By comparing the price elasticity in the $2 to $4 price range with the elasticity in the $8 to $10 range, you can conclude that the elasticity is
A) the same in both price ranges.
B) greater in the $2 to $4 range.
C) greater in the $8 to $10 range.
D) greater in the $8 to $10 range when the price rises but greater in the $2 to $4 range when the price falls.

Question

-The figure above illustrates a linear demand curve. By comparing the price elasticity in the $2 to $4 price range with the elasticity in the $8 to $10 range, you can conclude that the elasticity is
A) the same in both price ranges. 
B) greater in the $2 to $4 range. 
C) greater in the $8 to $10 range. 
D) greater in the $8 to $10 range when the price rises but greater in the $2 to $4 range when the price falls.

Quizplus · Accepted Answer

Price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. For a linear demand curve, the elasticity varies along the curve. It is higher at higher prices and lower at lower prices because the percentage change in quantity demanded for a given absolute change in price is larger at higher prices. Therefore, the elasticity is greater in the $8 to $10 range than in the $2 to $4 range.

-The Figure Above Illustrates a Linear Demand Curve