As price decreases and we move down further along a linear demand curve, the price elasticity...
As price decreases and we move down further along a linear demand curve, the price elasticity of demand will:
Group of answer choices
decrease.
increase.
stay the same.
approach infinity.
increase or decrease.
Homework Answers
Answer
Decrease.
Explanation :
In linear demand curve when we go down the price elasticity becomes smaller. In the upper part of demand curve there is higher price and lower quality so the percentage change is different at different points. So percentage change in quantity is large in compared to percentage change in price. So the value of elasticity of demand is large. But when on the demand we comes below the percentage change in quantity is less and percentage change in price are more so it results imto the decrease in elasticity of demand.
For any linear demand curve, the absolute value of the price elasticity of demand will fall as we move down and to the right along curve.
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