Price Elasticity of Demand

What does price elasticity measure?

• How much a company can expand

• How much demand changes when price changes

• Total sales in a market

• Number of competing brands

What happens to demand for an elastic product if the price increases?

• Demand rises

• Demand stays the same

• Demand falls

• Supply increases

Which product is typically inelastic?

• Designer perfume

• Movie tickets

• Groceries like bread or toilet paper

• New technology gadgets

During times of high inflation, what do companies monitor closely?

• Number of workers

• Price elasticity

• Value of currency

• Supply chain only

Which is an example of a company using elasticity to make decisions?

• Setting a fixed price for a year

• Raising gym membership prices and watching for consumer response

• Hiring more workers

• Reducing advertising

What factor makes a product more elastic?

• It's a necessity

• It has many alternative brands

• It’s government regulated

• It’s free

What strategy might companies use when products become more elastic?

• Ignore price changes

• Promote cost-saving benefits

• Increase advertising only

• Eliminate branding

What happened to sales of premium detergents like Tide during recent inflation?

• Increased dramatically

• Stayed the same

• Declined, as consumers switched to cheaper alternatives

• Were government subsidized

Why might companies offer smaller-sized versions of a product?

• To appeal to consumers with less money and maintain market share

• For environmental reasons only

• Due to supply shortages

• To test the market

What is a recent trend in consumer spending noted in the video?

• Spending has shifted from services to goods

• Consumers are only buying luxury items

• Spending is shifting from goods to services and experiences

• A dramatic decline in travel