Comment on the following statement: Elasticity is constant along ...

[leilurhhh]

Comment on the following statement: Elasticity is constant along a straight-line demand curve.
 
  What will be an ideal response?

Question 2

The firm shown in the figure above is
 
  A) a natural monopoly because its LRAC curve slopes downward where it intersects the demand curve.
  B) not a natural monopoly because its LRAC curve slopes downward where it intersects the demand curve.
  C) not a natural monopoly because its MC curve is horizontal.
  D) not a natural monopoly because its MC curve is below its LRAC curve.

[ilianabrrr]

Answer to Question 1

The statement is false. While the slope is constant along a straight line, the elasticity is not. In fact, at high prices (the upper area of a demand curve) the demand is elastic. As price falls (and quantity demanded increases), the price elasticity of demand gets smaller (in absolute value).

Answer to Question 2

A