Elasticity of Demand

Based on the demand curve for good X, it can be determined that good x has:

• Many substitutes
• A few substitutes
• No substitutes
• Only one substitute

A product is likely to have a price elasticity of demand that exceeds 1 when:

• Its price falls

• It is a necessity

• It has close substitutes

• Consumers are not very responsive to changes in price

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

Elasticity refers to

• how producers of goods and services react to price changes

• how consumers of goods and services react to price changes

• how far a supply of scarce goods can be stretched

• how often the price of a good or service changes when quantity demanded changes

If quantity demanded changes significantly when price changes, how is demand described

• elastic

• inelastic

• constant

• inconstant