Demand Assessment

If your salary increases by 50 % and in response you increase your t-shirt purchases by 5 %, income elasticity equals______and clothing is_______.

• 0.1; normal good

• 10; inferior good

• 0.1; luxury good

• 10; luxury good

If the elasticity of demand for a product equals 1.5, then an increase in the product price will cause total revenue to

• decrease.

• increase.

• remain the same.

If the demand for a product is inelastic, what does this tell you about consumer behavior?

• Consumers are really responsive to changes in price and significantly change the amount they buy based on prices.

• Consumers are not responsive to changes in price and don't significantly change the amount they buy based on prices.

• Consumers are completely unresponsive to changes in price and will buy the good no matter what.

• Consumers are really responsive to changes in price but only when the price decreases.

Which of the following has more elastic demand?

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Which of the following has more inelastic demand?

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Which of the following has more inelastic demand?

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Which of the following has more elastic demand?

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Which of the following has more inelastic demand?

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Which of the following has more inelastic demand?

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Which of the following has more inelastic demand?

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