Question

As you move up a linear demand​ curve, the price elasticity of demand in absolute value A. decreases. B. increases. C. stays the same. D. None of the above. On the lower part of a linear demand curve below the​ midpoint, the demand is​ ________ and raising the price causes total revenue to​ _________. A. ​elastic; decrease B. ​elastic; increase C. ​inelastic; increase D. ​inelastic; decrease

Answer 1

Answer:

The answers to the questions are;

B. increases.  

C. ​inelastic; increase.

Step-by-step explanation:

The price elasticity of demand for a linear demand in absolute value curve becomes smaller and smaller as we move downwards of the curve.

When the price elasticity of demand is calculated along a linear demand curve. This is so as for each pair of points at which the price elasticity of demand is calculated, the quantity demanded and the price change are somewhat  similar, but as we move towards the top of the demand curve, the high prices and the low quantities shows the increase in demand elasticity.

Also in the inelastic region, as it can be shown by the areas of the rectangles formed by to adjacent price points, increase in price, increases the total revenue.