Elasticity

The price elasticity of demand measures how much

• quantity demanded responds to a change in price.
• quantity demanded responds to a change in income.
• price responds to a change in demand.
• demand responds to a change in supply.

For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

• There are many substitutes for this good.
• The good is a necessity.
• The market for the good is narrowly defined.
  
• The relevant time horizon is long.

If the price on a product goes up the quantity demanded will go down. This follows the economic theory of:

• Law of Demand
• elasticity
• income effect
• None of the above

The elasticity of demand for tissues is 0.66. This means the demand for tissues is

• elastic
• unit elastic
• inelastic
• really expensive

Demand is unit elastic if it is less than 1.0

• True
• False

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

• True
• False

which of the following is not a determinant of demand elasticity?

• availability of substitutes
• share of consumer's budget spend on good
• duration of adjustment period
• government spending

What does it mean?

Ed < 1

• Perfectly inelastic demand

• Inelastic demand

• Unitarily elastic demand

• Elastic demand

• Perfectly elastic demand

What does it mean?

Ed > 1

• Perfectly inelastic demand

• Inelastic demand

• Unitarily elastic demand

• Elastic demand

• Perfectly elastic demand

What does it mean?

Ed = ∞

• Perfectly inelastic demand

• Inelastic demand

• Unitarily elastic demand

• Elastic demand

• Perfectly elastic demand