Econ Unit 2 Review

According to the law of demand, what happens to the quantity demanded when the price of a good increases, assuming all else is constant?

• It increases.

• It decreases.

• It stays the same.

• It fluctuates unpredictably.

If the price of Nikes dropped by 25%, what type of good is Nikes considered if many consumers buy more?

• Inelastic good

• Elastic good

• Unit elastic good

• Inferior good

Elasticity measures what aspect of consumer behavior?

• The total quantity of goods consumed

• The responsiveness of demand or supply to price changes

• The ability of producers to meet demand

• The distribution of income in the market

What does it mean when the elasticity coefficient is greater than 1 (E > 1)?

• Demand is inelastic.

• Demand is elastic.

• Demand is unit elastic.

• Demand is proportional.

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

• Toothpicks

• Electricity in your home

• Nikes

• Starbucks lattes

If the price of electricity changes by 25%, and consumers do not change their usage significantly, how is the demand classified?

• Elastic

• Unit elastic

• Inelastic

• Proportional

Which of the following scenarios demonstrates unit elastic demand?

• A) A 10% increase in price leads to a 5% decrease in demand.

• B) A 10% decrease in price leads to a 10% increase in demand.

• C) A 10% increase in price leads to no change in demand.

• D) A 10% increase in price leads to a 20% decrease in demand.

How does the demand curve behave when the elasticity is greater than 1?

• It becomes steeper.

• It becomes flatter.

• It remains unchanged.

• It shifts to the right.

A price increase causes a small drop in the quantity demanded of a product. Which of the following is most likely true?

• The good is elastic.

• The good is inelastic.

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

• A) A life-saving medicine

• B) Designer clothing

• C) Basic groceries

• D) Tap water