Moving down a straight-line demand curve, the absolute price elasticity of demand
A) increases.
B) is constant.
C) decreases.
D) varies in uncertain ways.

Question

Quizplus · Accepted Answer

As we move down a straight-line demand curve, the price decreases and the quantity demanded increases. According to the law of demand, as the price of a good decreases, the quantity demanded of that good increases. However, this increase in quantity demanded is not proportional to the decrease in price, hence the absolute price elasticity of demand decreases as we move down the demand curve.

Moving Down a Straight-Line Demand Curve, the Absolute Price Elasticity