Elasticity and Demand Quiz

What do people generally think of when they hear the word elasticity or elastic?

• something stretchy

• something inflexible

• something rigid

• something wrong

How do economists define elasticity? Elasticity is the degree to which:

• demand or supply reacts to a change in price

• a market adjusts to economic shocks

• government policies affect market equilibrium

• consumer preferences shift over time

What does the degree (or amount) of elasticity tell economists about producers and consumers?

• How much they will respond to a change in price

• How much total revenue changes in a market

• How much price stability exists in a market

When demand is said to be elastic, what is it that consumers are responding to? A change in _______.

If a consumer is very sensitive to a change in price, their demand is considered to be _______.

If a consumer is NOT sensitive to a change in price, their demand is considered to be _______.

What types of goods are considered to be inelastic?

• Luxuries

• Necessities

What types of goods are considered to be elastic?

• Luxuries

• Necessities

If the price of toothpaste or cereal goes up $2.00, people will buy:

• significantly less (as these are like luxuries).

• about the same amount (as these are like necessities).

• significantly more (as these are normal goods).

Do basic necessities like salt have many substitutes?

• No

• Yes