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Along a straight-line demand curve, the price drops by $10 and quantity rises by 200 units at every point, so the slope never changes. Why can the elasticity still change from point to point?
AElasticity only changes if the demand curve itself is curved rather than straight
BElasticity is always higher at low prices and low quantities than anywhere else on the curve
CSlope and elasticity are the same measurement written two different ways
DElasticity uses percentage changes, which depend on the price and quantity levels the curve is at
Answer & Solution
Correct answer: D. Elasticity uses percentage changes, which depend on the price and quantity levels the curve is at
1. Slope measures the rate of change in raw units, rise over run, and stays constant along a straight line.
2. Elasticity measures percentage changes, and the same $10 or 200-unit change is a different percentage depending on where on the curve it happens.
3. Near the top of the curve, price is high and quantity is low, so a $10 change is a small percentage of price while a 200-unit change is a large percentage of quantity, producing a high elasticity.
4. Near the bottom, price is low and quantity is high, so the same absolute changes are a large percentage of price and a small percentage of quantity, producing a low elasticity.
5. Option C collapses two distinct concepts into one and is exactly the mistake the source warns against.
6. Elasticity varies on a straight-line demand curve too, so option A is false.
_Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 5 "Elasticity", section 5.1 | Price Elasticity of Demand and Price Elasticity of Supply_
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