For a linear demand curve, how does the price elasticity of demand vary along the curve?

Show Answers

Elastic at the higher price segment and inelastic at the lower price segmentInelastic at the higher price segment and elastic at the lower price segmentInelastic throughout the entire curveConstant elasticity at every point on the demand curveUnitary elasticity along the entire demand curve

Explanation

On a linear demand curve, the price elasticity of demand is elastic when prices are high (upper portion) and becomes inelastic as prices decrease (lower portion). This occurs because the percentage change in quantity demanded relative to price changes varies along the straight line.