Suppose demand can be written as PQ = 1000.The price elasticity of demand is)
A) increasing as price rises.
B) decreasing as price rises.
C) constant regardless of prices and perfectly elastic.
D) constant regardless of prices and unit elastic.

Question

Quizplus · Accepted Answer

Since the demand function given is a linear one, regardless of the price, the elasticity of demand will remain constant at all points on the curve. Hence, the correct option is D) constant regardless of prices and unit elastic. This means that a 1% change in price will cause a 1% change in quantity demanded.

Suppose Demand Can Be Written as PQ = 1000