3.3 Elasticity of Demand

Multiple Choice

According to the Law of Demand, what happens to the quantity consumers buy when prices go down?

• They buy more

• They buy less

• They buy the same amount

• They stop buying

Fill in the Blank

Price Elasticity of Demand (PED) measures how ___ quantity demanded is to a change in price.

Multiple Choice

Which of the following statements about inelastic demand is correct?

• Quantity demanded is very sensitive to price changes

• Quantity demanded changes only a little with price changes

• If price increases, quantity demanded falls a lot

• If price decreases, quantity demanded increases a lot

Multiple Choice

Based on the cartoon and the definition, what does inelastic demand mean for consumers when the price of milk increases?

• They stop buying milk completely

• They buy much less milk

• They still buy milk even if the price increases

• They switch to another product

Multiple Choice

Which of the following is a characteristic of inelastic demand?

• Quantity demanded is highly sensitive to price changes

• Quantity demanded is insensitive to price changes

• There are many substitutes available

• It is usually a luxury good

Open Ended

Explain how the cartoon in the 'Elastic Demand' slide illustrates the concept of elastic demand.

Multiple Select

Select all the characteristics that are generally true for goods with elastic demand.

• Many substitutes

• Necessities

• Large portion of income

• Required now, rather than later

Multiple Choice

Which of the following goods is most likely to have elastic demand?

• Milk

• Medical care

• Pizza

• Diapers

Multiple Choice

Based on the graph and description, how does the shape of the inelastic demand curve differ from the elastic demand curve?

• Inelastic demand curve is flat, elastic demand curve is steep

• Both curves are equally steep

• Inelastic demand curve is steep, elastic demand curve is flat

• Both curves are flat

Multiple Choice

Which of the following is NOT a general characteristic of elastic goods?

• Few substitutes

• Luxuries

• Large portion of income

• Plenty of time to decide

Fill in the Blank

Fill in the blank: For elastic demand, a price increase causes total revenue to ___, while a price decrease causes total revenue to increase.

Fill in the Blank

The ability of consumers to respond to price changes is known as price ___.

Open Ended

Reflecting on today's lesson about elasticity of demand, why do you think some businesses are able to raise prices without losing many customers, while others cannot?