Elasticity Review because we have a 2 hour delay....

The price elasticity of demand measures how much

• quantity demanded responds to a change in price.
• quantity demanded responds to a change in income.
• price responds to a change in demand.
• demand responds to a change in supply.

Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is

• 0

• 1

• - 1

• 36

Income elasticity of demand measures how

• the quantity demanded changes as consumer income changes.
• consumer purchasing power is affected by a change in the price of a good.
• the price of a good is affected when there is a change in consumer income.
• many units of a good a consumer can buy given a certain income level.

Wheat has seen a decrease in demand of 5%, while the price has increased 7%

• 1.4 inelastic

• 1.4 elastic

• .71 inelastic

• .71 elastic

Oil has seen a decrease in demand of 9%, while the price has increased 13%

• 1.44 inelastic

• 1.44 elastic

• .69 inelastic

• .69 elastic

Is graph A or B more inelastic?

• A

• B

Describe your demand for a product if you buy the same amount of it or just a small amount less after a large price increase.

• elastic

• unitary elastic

• inelastic

• hyperelastic

What does it mean?

Ed < 1

• Perfectly inelastic demand

• Inelastic demand

• Unitarily elastic demand

• Elastic demand

• Perfectly elastic demand

What does it mean?

Ed > 1

• Perfectly inelastic demand

• Inelastic demand

• Unitarily elastic demand

• Elastic demand

• Perfectly elastic demand

What does it mean?

Ed = ∞

• Perfectly inelastic demand

• Inelastic demand

• Unitarily elastic demand

• Elastic demand

• Perfectly elastic demand