Most demand curves are relatively elastic in the upper-left portion because the original price:

• A. is low relative to quantity demanded, so consumers are less sensitive to price changes
• B. is high relative to quantity demanded, so a small change in price leads to a large change in quantity
• C. is at equilibrium, so elasticity is always maximized
• D. does not affect elasticity in any part of the demand curve

Answer: (B)

Verified step by step guidance

1. Understand the concept of price elasticity of demand, which measures how much the quantity demanded of a good responds to a change in its price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.
2. Recall that the price elasticity of demand varies along a linear demand curve. Specifically, it tends to be more elastic (greater than 1) in the upper-left portion of the demand curve where prices are high and quantities demanded are low.
3. Recognize that when the price is high relative to the quantity demanded, even a small percentage change in price can cause a large percentage change in quantity demanded, making demand more elastic in this region.
4. Contrast this with the lower-right portion of the demand curve where prices are low and quantities demanded are high, making demand relatively inelastic because changes in price have a smaller proportional effect on quantity demanded.
5. Conclude that the correct explanation for why demand curves are relatively elastic in the upper-left portion is that the original price is high relative to quantity demanded, so a small change in price leads to a large change in quantity demanded.