Price Elasticity Quiz

What does it mean when price elasticity of supply or demand is INELASTIC?

• Consumers and firms are very responsive to changes in market price

• Consumers and firms are not very responsive to changes in market price

• Consumers and firms are proportionally responsive to changes in market price

• Consumers and firms are not affected by changes in market price

What does it mean when price elasticity of supply or demand is UNIT ELASTIC?

• Consumers and firms are very responsive to changes in market price

• Consumers and firms are not very responsive to changes in market price

• Consumers and firms are proportionally responsive to changes in market price

• Consumers and firms are not affected by changes in market price

Define PRICE ELASTICITY.

• The measurement of how responsive consumers and firms are to a change in price in the market

• The measurement of how responsive consumers are to a change in price in the market

• The measurement of how responsive firms are to a change in price in the market

• The measurement of how responsive consumers and firms are to a change in quantity demanded or supplied

In the space provided, describe the characteristics of goods and services that tend to have a more ELASTIC DEMAND.

• Goods and services are generally luxuries or wants and are not needed for survival

• Goods and services have many substitutes

• Goods and services require a large portion of a buyer's disposable income to purchase

• Buyers have time to contemplate the purchase and the purchase of the good/service is not time-sensitive (it can wait)

In the space provided, describe the characteristics of goods and services that tend to have a more INELASTIC DEMAND.

• Goods and services fulfill a need required for survival

• Goods and services have few substitutes

• Goods and services do not require a large portion of a buyer's disposable income to purchase

• Buyers do not have time to contemplate the purchase and the purchase of the good/service is time-sensitive (it can't wait)

The SUPPLY OF WATER is generally more

• ELASTIC

• INELASTIC

The DEMAND FOR CEREAL is generally more

• ELASTIC

• INELASTIC

The DEMAND FOR GASOLINE is generally more

• ELASTIC

• INELASTIC

The SUPPLY OF DIAMONDS is generally more

• ELASTIC

• INELASTIC

Define the PRICE ELASTICITY OF DEMAND.

• The measurement of how responsive consumers are to a change in price in the market

• The measurement of how responsive firms are to a change in price in the market

• The measurement of how responsive consumers and firms are to a change in price in the market

• The measurement of how responsive consumers and firms are to a change in quantity demanded or supplied