Demand , elasticity

What does the law of demand state?

• Demand increases as price increases.

• Demand decreases as price increases.

• Demand is constant regardless of price changes.

• Demand and price are unrelated.

If the price of a necessity like bread increases significantly, the elasticity of demand for bread is likely to be:

• Elastic

• Inelastic

• Unitary elastic

• Perfectly elastic

If the price of a luxury car increases by 10%, and the quantity demanded decreases by 20%, what is the price elasticity of demand?

• 0.5

• 1

• 2

• 5

Inelastic demand is characterized by a price elasticity of:

• Less than 1

• Exactly 1

• Greater than 1

• 0

Elasticity of demand measures:

• How much consumers desire a product.

• How sensitive quantity demanded is to changes in price.

• The total demand for a product in the market.

• The price at which demand becomes perfectly elastic.

Which of the following goods is likely to have the most elastic demand?

• Prescription medication.

• Bottled water during a heatwave.

• Generic brand cereal.

• Luxury designer clothing.

When the price of a product decreases and the quantity demanded increases, it is an example of:

• Elastic demand.

• Inelastic demand.

• Unitary elastic demand.

• Perfectly inelastic demand.

Which of the following factors can influence the elasticity of demand?

• Availability of substitutes

• Income of consumers

• Advertising

• All the above

When the demand for a product increases as income increases, it is considered a _______ good.

The total revenue of a business is calculated by multiplying the _______ by the quantity sold. (........ X Quantity)