The price elasticity of demand along a linear demand curve:
A)is equal to the rate of change of the slope.
B)is greater than the absolute value of the slope.
C)is less than the absolute value of the slope.
D)increases in absolute value as the price rises.

Question

Quizplus · Accepted Answer

The price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good. For a linear demand curve, the elasticity varies along the curve. It increases in absolute value as we move up the curve (as the price rises), because the base quantity from which the percentage change is calculated gets smaller, making the elasticity larger in absolute terms.

The Price Elasticity of Demand Along a Linear Demand Curve