A straight-line downward-sloping demand curve has a price elasticity of demand which
A)decreases as price decreases.
B)increases as price decreases.
C)is zero at all prices.
D)is unitary at all prices.

Question

Quizplus · Accepted Answer

The price elasticity of demand decreases as price decreases along a straight-line downward-sloping demand curve because the proportion of total expenditure (price times quantity) represented by a change in price becomes smaller relative to the base from which the change is calculated.

A Straight-Line Downward-Sloping Demand Curve Has a Price Elasticity of Demand