Suppose a good has a downward-sloping, straight-line demand curve. If the price elasticity of demand is 2.5 when the price is $10 per unit, then the price elasticity of demand when the price is $7 per unit could be
A) approaching infinity.
B) 2.7.
C) 2.5.
D) 1.7.

Question

Quizplus · Accepted Answer

As price decreases along a linear demand curve, the price elasticity of demand decreases. Therefore, at a lower price of $7, the elasticity would be less than 2.5, making 1.7 a plausible value.

Suppose a Good Has a Downward-Sloping, Straight-Line Demand Curve