Elasticity of Demand

Demand is almost always more elastic at higher prices and less elastic at lower prices.

• True
• False

The longer the adjustment period, the greater the consumers' ability to substitute relatively higher-priced products with lower-priced substitutes.

• True
• False

If demand is inelastic, producers will never willingly cut the price since doing so would reduce total revenue.

• True
• False

Demand is unit elastic if it is less than 1.0

• True
• False

Suppose that elasticity of demand of socks is 0.7.  If the price of socks is reduced by 10%, how will sales be effected?

• sales will grow by more than 10%
• Sales will grow by 10%
• Sales will grow by less than 10%
• Sales will decrease by 10%

If the price on a product goes up the quantity demanded will go down. This follows the economic theory of:

• Law of Demand
• elasticity
• income effect
• None of the above

The formula for calculating elasticity of demand is:

• The % change in price over the % change in quantity demanded
• The % change in quantity demanded over the % change in price
• The change in price over the change in quantity demaned
• The change in quantity demanded over the change in price

The elasticity of demand for tissues is 0.66. This means the demand for tissues is

• elastic
• unit elastic
• inelastic
• really expensive

suppose a product's elasticity of demand is 1.7. How responsive is the quantity demanded to a change in price?

• not responsive
• relatively responsive
• negatively responsive
• all of the above

which of the following is not a determinant of demand elasticity?

• availability of substitutes
• share of consumer's budget spend on good
• duration of adjustment period
• government spending