Along a straight-line demand curve (dropping all minus signs), the price elasticity of demand
A)gets larger as quantity demanded gets larger.
B)gets smaller as quantity demanded gets larger.
C)always equals one.
D)is constant (though not necessarily equal to one).

Question

Quizplus · Accepted Answer

The price elasticity of demand along a straight-line demand curve decreases as the quantity demanded increases. This is because the formula for elasticity involves the ratio of percentage changes in quantity demanded to percentage changes in price, and as you move down a straight-line demand curve, the same change in price results in smaller percentage changes in quantity demanded.

Along a Straight-Line Demand Curve (Dropping All Minus Signs), the Price