4.3 Elasticity of Demand

What does 'elasticity of demand' refer to?

• The change in demand when price changes

• The change in supply when demand changes

• The change in price when supply changes

• The change in demand when supply changes.

When the price of a product goes up, the demand for it usually goes ____.

• Up

• Down

• Stays the same

What is the 'Elasticity of Demand'?

• The relationship between the percentage change in quantity demanded and the percentage change in price.

• The relationship between supply and demand.

• The change in demand over time.

• The fixed price of goods.

Elasticity of demand measures how a price change affects the _______ of a particular good that people want to buy.

• quality

• quantity

• color

• size

What does it mean when demand is described as 'elastic'?

• People are not sensitive to price changes.

• The percentage change in quantity demanded is greater than the percentage change in price.

• The percentage change in quantity demanded is less than the percentage change in price.

• The percentage change in quantity demanded is the same as the percentage change in price.

Fill in the blank: Demand is considered 'inelastic' when the percentage change in quantity demanded is _______ the percentage change in price.

• greater than

• less than

• the same as

Which of the following is a factor that affects the elasticity of demand?

• Color of the product

• Number of substitutes

• Brand name

• Size of the product.

Fill in the blank: One of the factors that affect the elasticity of demand is the _______ spent on the good.

• Color

• Percentage of income

• Brand

• Size

What happens to total revenue when there is elastic demand and an increase in price?

• It increases

• It decreases

• It remains the same

• It doubles

Elastic demand and a decrease in price lead to a(n) _______ in total revenue.

• decrease

• increase

• no change

• doubling