Elasticity variation along demand curves

Steps:

• Recall price elasticity formula: |E_d| = |(ΔQ/Q) / (ΔP/P)|, depending on slope and P/Q ratio.
• Assess curve 1: vertical line indicates zero responsiveness, not infinite.
• Compare curves 2 and 4: curve 2 is flatter (higher elasticity) only in parts, not entirely.
• Analyze curve 3: shows decreasing elasticity as price rises due to shape.
• Confirm curve 4: steeper at higher prices, reducing |E_d| as price increases.

Why D is correct:

• Curve 4's increasing steepness at higher prices lowers the |dQ/dP| * (P/Q) ratio, decreasing elasticity per the elasticity formula.

Why the others are wrong:

• A: Curve 1 is vertical, yielding constant zero elasticity, not infinite.
• B: Curve 2 has lower elasticity than curve 4 in upper sections due to relative steepness.
• C: Curve 3 exhibits decreasing, not increasing, elasticity as price rises.

Final answer: D