Question

explain why the elasticity is not constant along a downward sloping demand curve?

Answer 1

As we know Elasticity is the measure of rate of percentage change in quantity to percentage change in prices. So it can be represented as below.

So, As we know for a downward sloping demand curve the price keeps on decreasing as we move below and quantity keeps on increasing. While the slope of demand curve is constant as downward sloping line has constant slope.

So, As the price is decreasing so the percentage change in price will increase as we move below, moreover with increasing quantity the percentage change in quantity will decrease. So the elasticity decreases as we move below. Conversely, Elasticity increases as we move up along the demand curve.

In other way using the formula we can explain :-

As, Slope of demand curve = ∆P/∆Q.

Now, Since slope is constant so ∆P/∆Q is constant. So Elasticity will depend upon P/Q

Now, On the lower part of demand curve the price is small and quantity is high. So, P/Q will be small.

• So, Elasticity will be smaller at the lower part of demand curve.

Conversely, On the upper half of demand curve the price is high and quantity is small. So, P/Q will be larger.

• So, Elasticity will be higher at the upper part of demand curve.

Hence, Its clearly stated from above discussion that elasticity is not constant along a downward sloping demand curve.

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