Elasticity Along the Linear Demand Curve
Elasticity on a linear demand curve varies as we move along the curve, unlike its slope, which remains constant. The reason for this is that the slope measures the relationship between changes in two variables—price and quantity—while elasticity reflects the relationship between the percentage changes in these variables.
Elasticity Along the Demand Curve – Graph
As seen in the graph, elasticity varies along a linear demand curve. The demand is elastic in the section where prices are high and quantity demanded is low, while it is inelastic when prices are low and quantity demanded is high. The reason is that when the price is low and quantity is high, a price change leads to a large percentage increase in price but a relatively smaller percentage change in quantity demanded. Conversely, when prices are high, a price variation results in a small percentage change compared to the potential change in quantity demanded.
Point A represents the point of unitary elasticity on the linear demand curve, where elasticity equals 1. To the right of this point, the demand is inelastic, and to the left, it is elastic.
In conclusion, a linear demand curve does not have constant elasticity. It contains an elastic section, a unitary elasticity point, and an inelastic section. A demand curve with constant elasticity is possible but is considered a special case.