Demand Elasticity

Demand is almost always more elastic at higher prices and less elastic at lower prices.

• True

• False

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

What does it mean?

• Perfectly inelastic demand

• Inelastic demand

• Unitarily elastic demand

• Elastic demand

• Perfectly elastic demand

What is elasticity of demand?

• Elasticity of demand measures how drastically consumers will cut back or increase their demand for a good when prices rise or fall.

• Elasticity of demand measures how drastically businesses will cut back or increase their supply for a good when prices rise or fall.

• Elasticity of demand measures how drastically businesses will increase their demand for the supplies they create when prices rise and fall.

• Elasticity of demand measures how drastically consumers will increase their spending when prices decline.

Match the following definitions to the correct term.

• Inelastic

• When a given change in price causes a relatively smaller change in quantity demanded

• Elastic

• General measure of responsiveness (cause and effect relationship)

• Demand Elasticity

• When a given change in price causes a relatively larger change in quantity demanded

• Unit Elastic

• When a given change in price causes a proportional change in quantity demanded

• Elasticity

• Extent to which a change in price causes a change in quantity demanded, aka whether it is a big or small change

​ (a)   demand - price changes have little effect on the quantity you buy.

​ (b)   demand - price changes have a significant effect on the quantity you buy.

• Inelastic

• Elastic

Necessities have ​ (a)   Demand

Luxuries have ​ (b)   Demand

• inelastic

• elastic

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

Which of the following items is Inelastic?

• Potato Chips

• Celsius Energy Drink

• Insulin

• Levi Jeans

What happens to total revenue when the price is lowered in the case of inelastic demand?

• Total revenue falls

• Total revenue rises

• Total revenue remains unchanged

• There is not enough information to determine what happens to total revenue