Elasticity of Demand and Supply

1. *True or False*: If the demand for a good is elastic, a small price increase will lead to a large decrease in quantity demanded.

• True

• False

2. *True or False*: A good with many substitutes is likely to have inelastic demand.

• True

• False

3. *True or False*: The supply of a good is more elastic in the short run than in the long run.

• True

• False

4. *True or False*: If the elasticity of demand is 0.5, demand is considered elastic.

• True

• False

5. *True or False*: A necessity good like medicine tends to have inelastic demand.

• True

• False

6. *True or False*: The elasticity of supply measures how responsive producers are to changes in price.

• True

• False

7. *True or False*: Luxury goods tend to have inelastic demand.

• True

• False

8. *True or False*: If demand is perfectly elastic, the demand curve is horizontal.

• True

• False

9. *True or False*: Goods with elastic demand tend to have a high price elasticity coefficient (greater than 1).

• True

• False

10. *True or False*: In the long run, both demand and supply tend to become more elastic.

• True

• False