[amp_mcq option1=”cannot be estimated” option2=”decreases as price falls” option3=”increases as price falls” option4=”remains constant at every price” correct=”option3″]<\/p>\n
The correct answer is: C. increases as price falls.<\/p>\n
Price elasticity of demand is a measure of how responsive consumers are to changes in the price of a good or service. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price.<\/p>\n
A downward-sloping straight line demand curve means that consumers are willing to buy more of a good or service at a lower price. This is because the lower price makes the good or service more affordable, and consumers have more money left over to spend on other goods and services.<\/p>\n
As the price falls, the quantity demanded will increase. This means that the price elasticity of demand will be positive. The price elasticity of demand will be greater in the lower price range, because consumers are more responsive to changes in price when the price is low.<\/p>\n
Option A is incorrect because the price elasticity of demand can be estimated for any demand curve, including a downward-sloping straight line demand curve.<\/p>\n
Option B is incorrect because the price elasticity of demand increases as price falls.<\/p>\n
Option D is incorrect because the price elasticity of demand is not constant at every price. It is greater in the lower price range than in the higher price range.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”cannot be estimated” option2=”decreases as price falls” option3=”increases as price falls” option4=”remains constant at every price” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-56617","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n