Supple, Demand, and Elasticity Test

What is the term used to describe a product that can be used in place of another?

• Complementary good

• Substitute good

• Law of demand

• Elasticity

Jasmine added soup to the line of products she offered but discontinued it because there wasn’t a high enough _________.

• Demand

• Complementary good

• Law of demand

• Substitute good

Which of the following describes the income effect?

• A) When the price gets too high, people will purchase a similar but cheaper product.

• B) Buying more of a product adds less additional satisfaction for buyers than their original purchase of the same product, so they will only do it if the price is lower.

• C) People can only afford to buy a certain amount because they only earn a certain amount of money.

Fill in the blank: The substitution effect occurs when the price gets too high, and people will purchase a similar but ______ product.

• expensive

• cheaper

• luxurious

What does Jasmine's Supply Curve indicate about the relationship between price and quantity supplied?

• A) As price increases, quantity supplied decreases.

• B) As price increases, quantity supplied increases.

• C) As price decreases, quantity supplied increases.

• D) There is no relationship between price and quantity supplied.

If a taco sells for $2.50 - $3.00, Jasmine will supply between _______ tacos per week.

• A) 200, 300

• B) 250, 350

• C) 300, 400

• D) 450-500

If the price of a component that is needed to make a product goes up, the manufacturer of the product will be

• pleased that they will be able to charge more for the product.

• displeased because it will reduce their profit on the product.

If people continue to buy a product even when the price goes up, that product is said to have

• elastic demand

• inelastic demand

What is the formula to calculate elasticity of demand? Demand elasticity = percentage change in _______ / percentage change in _______.

• A) price, quantity demanded

• B) quantity demanded, price

• C) supply, demand

• D) demand, supply

Which calculation shows elastic demand, and which shows inelastic demand?

• A) Elastic demand: 9%/50% = 0.18, Inelastic demand: 80%/50% = 1.6

• B) Elastic demand: 80%/50% = 1.6, Inelastic demand: 9%/50% = 0.18