Chapter 3 Review: Elasticity of Demand

If the absolute value of the elasticity of demand formula is greater than 1, what type of demand is it?

• Elastic
• Unitary
• Inelastic
• None of the above

How do close substitutes for a product affect the elasticity of demand?

• Increase elasticity
• Decrease elasticity
• Make demand unitary
• Have no effect

What is the elasticity coefficient if the price decreases from $20 to $15 and the quantity demanded increases from 100 to 150?

• 0.5
• 2.0
• 2.5
• 1.5

How does a change in price affect quantity demanded in elastic demand?

• Small change
• Large change
• No change
• Opposite change

Which factor determines the elasticity of demand for a product with close substitutes?

• Consumer preferences
• Availability of substitutes
• Market competition
• Income level

What does it mean if the elasticity coefficient is equal to 1?

• Demand is elastic
• Demand is perfectly elastic
• Demand is inelastic
• Demand is unitary

Which of the following products is likely to have inelastic demand?

• Electric cars
• Bottled water
• Smartphones
• Luxury watches

Which of the following is an example of a product with elastic demand?

• Food
• Gasoline
• Automobiles
• Medicine

Inelastic demand is characterized by a ______ change in quantity demanded due to a change in price.

• Opposite
• Large
• Small
• No

What are the characteristics of demand?

• the desire and ability to buy a product
• The ability and willingness to buy a product
• The willingness and desire to buy a product
• The desire, ability, and willingness to buy a product