Final answer:
The price elasticity of demand increases as the price decreases along a straight-line downward-sloping demand curve. Elasticity is greater at lower prices due to larger percentage changes in quantity demanded with price reductions, and it is lower at higher prices when quantity demanded is less responsive to price changes.
Step-by-step explanation:
The student has asked about the nature of price elasticity of demand along a straight-line downward-sloping demand curve. Specifically, the question concerns how the price elasticity of demand changes as the price decreases. In this case, the price elasticity of demand increases as price decreases. This is because, on such a demand curve, moving down the curve implies lower prices and an increasing quantity demanded. Importantly, elasticity measures the percentage change in quantity demanded in response to a percentage change in price. At higher prices (upper part of the downward-sloping curve), a one percent decrease in price tends to result in a smaller percentage increase in quantity demanded compared to when prices are lower (lower part of the curve), where the same one percent decrease in price causes a larger percentage change in quantity demanded.
In terms of the price elasticity of demand, elasticities greater than one indicate that the demand is elastic (highly responsive to price changes), which tends to be the case at lower prices on the demand curve. Conversely, elasticities less than one indicate inelastic demand (less responsive to price changes), which is typical at higher prices.