As you move up along a straight-line demand curve,
A) the price elasticity of demand decreases in size.
B) the price elasticity of demand increases in size.
C) total revenue always decreases.
D) total revenue always increases.
E) total revenue never changes.

Question

Quizplus · Accepted Answer

As you move up along a straight-line demand curve, the price elasticity of demand increases in size. This is because higher up on the curve, a smaller change in price will lead to a larger change in quantity demanded, making the demand more price sensitive. This means that changes in price will have a greater impact on total revenue. Therefore, option B is the correct answer.

As You Move Up Along a Straight-Line Demand Curve