ELASTICITY OF DEMAND PPT

Open Ended

Why is understanding the elasticity of demand important for businesses and policymakers?

Open Ended

What would you do if the price of your favorite product suddenly doubled?

Multiple Choice

What is the main difference between supply and demand in economics?

• Supply is about how much producers are willing to sell, while demand is about how much consumers are willing to buy.

• Supply is about how much consumers are willing to buy, while demand is about how much producers are willing to sell.

• Supply and demand are the same concept in economics.

• Supply is only related to services, while demand is only related to goods.

Open Ended

Based on the scenarios shown, what factors might influence your decision to choose a sports car over a basic car?

Multiple Choice

Which of the following choices best demonstrates a response to high gas prices?

• Walk instead of driving.

• Buy a more expensive car.

• Drink tap water.

• Make coffee at home.

Open Ended

How do the choices between buying soda or drinking tap water, and buying Starbucks coffee or making coffee at home, illustrate the concept of demand?

Multiple Select

Select all the options that represent a choice between a luxury and a basic item.

• Sports car vs. basic car

• Michael Kors purse vs. basic purse

• Buy soda vs. drink tap water

• Buy Starbucks coffee vs. make coffee at home

Multiple Choice

What does elasticity of demand measure?

• How consumers react to a change in price

• How much money consumers spend

• How many products are available in the market

• How producers set prices

Multiple Select

Which of the following statements about elasticity and inelasticity of demand are correct?

• Elastic demand is very sensitive to price changes.

• Inelastic demand is not very sensitive to price changes.

• Elastic demand means consumers will not change their buying habits.

• Inelastic demand means consumers will change their buying habits drastically.

Open Ended

Explain why the result of the price elasticity of demand formula is always negative according to the law of demand.

Multiple Choice

Which formula is used to calculate percentage change?

• (Old Number – New Number) / Old Number x 100

• (New Number – Old Number) / Old Number x 100

• (Old Number + New Number) / 2 x 100

• (Old Number – New Number) / New Number x 100

Multiple Choice

If the price elasticity coefficient is greater than 1, what does this indicate about demand?

• Demand is elastic

• Demand is inelastic

• Demand is unit elastic

• There is no change in demand

Open Ended

Explain how the availability of substitutes affects the elasticity of demand for a product. Provide an example to support your answer.

Multiple Choice

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

• Steak

• Milk

• Designer clothes

• Video games

Multiple Select

Select all the statements that are true about how demand changes over time when prices increase.

• Consumers always react quickly to price increases.

• Demand is inelastic in the short term because it takes time to find substitutes.

• Over time, demand can become more elastic as people find alternatives.

• Demand never changes regardless of time.

Multiple Choice

Which of the following factors can cause the elasticity of demand for a good to change at different price levels?

• Availability of substitutes

• Relative importance in the budget

• Whether the good is a necessity or luxury

• All of the above

Open Ended

How does the elasticity of demand impact a firm's total revenue when prices change?

Multiple Choice

Which of the following shows the relationship of elastic demand to total revenue?

• Prices rise, demand falls, revenues decrease

• Prices rise, demand rises, revenues increase

• Prices fall, demand falls, revenues decrease

• Prices rise, demand rises, revenues decrease

Multiple Choice

Measures how drastically buyers will increase or decrease their demand for a good when price rises or falls is known as

• Unitary elasticity

• Substitute

• Elasticity of demand

• Inelasticity of demand

Multiple Choice

Which of the following is an example of a luxury?

• Corn

• Water

• Filet mignon

• Milk

Open Ended

Do you have any questions or would you like to know more about the topic of elasticity of demand?

Open Ended

After learning about the elasticity of demand, what is one real-life situation where understanding this concept could help you make better decisions as a consumer or a business owner?