Read this chapter to learn about the concept of elasticity. Be sure to read Sections 5.1-5.4 following the introduction. The Price Elasticity of DemandPrice Elasticities Along a Linear Demand CurveWhat happens to the price elasticity of demand when we travel along the demand curve? The answer depends on the nature of the demand curve itself. On a linear demand curve, such as the one in Figure 5.2 "Price Elasticities of Demand for a Linear Demand Curve", elasticity becomes smaller (in absolute value) as we travel downward and to the right. Figure 5.2 Price Elasticities of Demand for a Linear Demand Curve  The price elasticity of demand varies between different pairs of points along a linear demand curve. The lower the price and the greater the quantity demanded, the lower the absolute value of the price elasticity of demand. Figure 5.2 "Price Elasticities of Demand for a Linear Demand Curve" shows the same demand curve we saw in Figure 5.1 "Responsiveness and Demand". We have already calculated the price elasticity of demand between points A and B; it equals −3.00. Notice, however, that when we use the same method to compute the price elasticity of demand between other sets of points, our answer varies. For each of the pairs of points shown, the changes in price and quantity demanded are the same (a $0.10 decrease in price and 20,000 additional rides per day, respectively). But at the high prices and low quantities on the upper part of the demand curve, the percentage change in quantity is relatively large, whereas the percentage change in price is relatively small. The absolute value of the price elasticity of demand is thus relatively large. As we move down the demand curve, equal changes in quantity represent smaller and smaller percentage changes, whereas equal changes in price represent larger and larger percentage changes, and the absolute value of the elasticity measure declines. Between points C and D, for example, the price elasticity of demand is −1.00, and between points E and F the price elasticity of demand is −0.33. On a linear demand curve, the price elasticity of demand varies depending on the interval over which we are measuring it. 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 the curve. When the price elasticity of demand is low the demand curve will be?A demand curve for a product with low elasticity appears to be steeper, because the quantity demanded doesn't change much, even if prices do. Products with low price elasticity are described as being inelastic. Products with high price elasticity are generally non-staple goods.
Why is the demand curve more elastic at higher prices?Key Takeaways. Many factors determine the demand elasticity for a product, including price levels, the type of product or service, income levels, and the availability of any potential substitutes. High-priced products often are highly elastic because, if prices fall, consumers are likely to buy at a lower price.
What happens to the value of the price elasticity of demand as you move up a straight line demand curve?The price elasticity of demand in absolute value increase as we move upward along the linear demand curve.
What happens to the slope of the demand curve as the good becomes more elastic why what about the supply curve?Demand Curves and Elasticity
Elasticity affects the slope of a product's demand curve. A greater slope means a steeper demand curve and a less-elastic product.
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As you move along the demand curve from higher to lower prices, the price elasticity of demand
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