Price Elasticity

What does the elasticity of demand measures?

• How the changes in prices affect global economy.

• How customers react to changes in prices.

• How customers react to changes in quality.

To determine elasticity of demand economist use a...

• Chart

• Formula

• None of the above

Since the elasticity of demand is downward sloping the elasticity should always be negative.

• True

• False

• Information not given.

The Price elasticity of milk is 1.4, therefore we can say that milk is...

• Elastic

• Inelastic

• Unit elastic

The Price elasticity of Bread is 1, therefore we can say that bread is...

• Elastic

• Inelastic

• Unit elastic

The Price elasticity of soda is -0.8, therefore we can say that soda is...

• Elastic

• Inelastic

• Unit elastic

The reason why Chevrolet cars are very elastic is because...

• They can be easily replaced by other cars

• No matter the price, people will always choose chevrolet

• Infomation not given.

Some factors that affect price elasticity are...

• The number of subtitutes and how dependant you are on the good.

• The number of customers and producers of the good.

• How dependant you are and the quality of the good.

Cars on the short run, are elastic because

• Their price is expensive.

• They can't be easily replaced.

• They can be easily replaced.

Gasoline is inelastic on the short and the long run because...

• It is very expensive.

• We depend on oil to make it.

• There are very few subtitutes to gasoline.