Picture a linear downward-sloping demand curve. If the price continues to fall, the price elasticity will
A) change from elastic, to unit elastic, to inelastic
B) remain unchanged whatever the price range
C) change from inelastic, to elastic, to unit elastic
D) change from unit elastic, to elastic, to inelastic
E) change from elastic, to inelastic, to unit elastic

Question

Quizplus · Accepted Answer

On a linear demand curve, as we move down the curve (indicating a fall in price), the demand changes from elastic (where a small change in price leads to a larger percentage change in quantity demanded), to unit elastic (where the percentage change in price equals the percentage change in quantity demanded), and finally to inelastic (where a change in price leads to a smaller percentage change in quantity demanded). This progression reflects the changing sensitivity of consumers to price changes along the curve.

Picture a Linear Downward-Sloping Demand Curve