The reason the elasticity changes along the demand curve is because a) percentage changes between larger numbers are smaller than percentage changes between smaller numbers. b) percentage changes between smaller numbers are smaller than percentage changes between large numbers. c) elasticity doesn't change along the demand curve.

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Business

Kobe Morrow

4 May, 04:37

The reason the elasticity changes along the demand curve is because a) percentage changes between larger numbers are smaller than percentage changes between smaller numbers. b) percentage changes between smaller numbers are smaller than percentage changes between large numbers. c) elasticity doesn't change along the demand curve.

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Answers (2)

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Emmett Vasquez · Answer 1

A. percentage changes between larger numbers and smaller than percentage changes between smaller numbers

Orr · Answer 2

a) percentage changes between larger numbers are smalle

than

percentage changes between smaller numbers

Explanation:

"The price elasticity of demand (PED) captures how price-sensitive consumers are for a given product or service by measuring the responsiveness of quantity demanded to changes in the good's own price."

"The formula usually yields a negative value because of the inverse relationship between price and quantity demanded. However, economists often disregard the negative sign and report the elasticity as an absolute value."

"When PED is greater than one, demand is elastic. This can be interpreted as consumers being very sensitive to changes in price: a 1% increase in price will lead to a drop in quantity demanded of more than 1%.

When PED is less than one, demand is inelastic. This can be interpreted as consumers being insensitive to changes in price: a 1% increase in price will lead to a drop in quantity demanded of less than 1%."

Reference: Boundless Economics. "Price Elasticity on Demand." Lumen, 2019