A straight line, downward-sloping demand curve implies that, as price falls, the elasticity of demand _________________.

increases

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decreases

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remains the same

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is zero

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Solution

The correct option is A decreases
Under point method, a straight line downward sloping demand curve implies that, as price falls, the elasticity of demand decreases from infinity to zero.

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For a normal good with a downward sloping demand curve:

A vertical straight line demand curve shows that demand rises to infinity even when price remains constant.

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