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There are different zones of elasticity on a graph, but if we are to imagine a negatively sloped, straight line on a price v quantity graph, we find that elasticity differs based on where we look on the graph. Why is this the case, rather then elasticity being constant?

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  • $\begingroup$ Welcome to the site. You may find answers to this question helpful. $\endgroup$ – Adam Bailey Jul 4 at 9:49
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Theoretically, the responsiveness of quantity demanded is different at different prices. Take the equation for the elasticity of demand: $$\epsilon_{D}=\frac{\Delta{Q}}{\Delta{P}}\frac{P}{Q}$$ The equation itself is non-constant as it depends on P and Q. Lets assume a linear demand curve with the simple form: $P(Q)=6-Q$. If we take an equal change in price, say $\Delta{P}=1$, and since the demand curve is linear in this case, we see it has a slope = $-1$ and thus the $\Delta{Q}=1$. If we have two situations where $P=5$ and $P=4$, then, to keep in accordance with our slope, lets say $Q=1$ and $Q=2$, respectively. The two elasticities of demand for these two prices would be $\epsilon_{D}=5$ and $\epsilon_{D}=2$ for the higher and lower price respectively.

In short, the elasticity of demand is a function of the responsiveness of quantity demanded to changes in prices that depends on the current price/quantity combination. At a higher point up the demand curve, the elasticity is higher, or demand more elastic, than at lower points.

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