Which of the following is true for higher prices along a linear downward-sloping demand curve for a good?
A) The price elasticity of demand is lesser than 1 at higher prices.
B) Higher quantities of the good are demanded at higher prices.
C) Higher prices are associated with unit elastic demand.
D) Higher prices are associated with higher price elasticities of demand.

Question

Quizplus · Accepted Answer

Along a linear downward-sloping demand curve, higher prices are found at the upper part of the curve where the quantity demanded is lower. In this region, a small change in price leads to a relatively larger change in quantity demanded, indicating a higher price elasticity of demand (elastic demand). This is because the percentage change in quantity demanded is greater than the percentage change in price at higher prices, making the price elasticity of demand greater than 1.

Which of the Following Is True for Higher Prices Along