On a linear demand curve that intersects both axes
A) the elasticity exceeds 1.00 at all prices.
B) the elasticity is less than 1.00 at all prices.
C) the elasticity equals 1.00 at all prices.
D) the elasticity decreases as the price falls and quantity increases.

Question

Quizplus · Accepted Answer

On a linear demand curve, elasticity varies along the curve. It is greater than 1 (elastic) at higher prices and lower quantities, equals 1 (unitary elastic) at the midpoint, and is less than 1 (inelastic) at lower prices and higher quantities. Thus, elasticity decreases as price falls and quantity increases.

On a Linear Demand Curve That Intersects Both Axes