Elasticity: The Economic Concept Behind How Companies Price Products | The Price Index | WSJ

When inflation is high companies do what

• raise prices

• lower prices

Elasticity means

• how much does the price of an item increase during times of inflation

• how much does the demand for an item or service change when the price changes

Elastic demand means that an increase in price will cause

• a decrease in demand

• an increase in demand

Elastic demand means that a price change

• will not cause a large change in demand

• will cause a major shift in demand.

In recent months, because of inflation,  there has been a decline in the purchase of .... (mark all that apply)

• apparel

• home goods

• premium (name brand) products

• pet food

• soft drinks

According the the video, what can companies do to try to get consumers to buy their premium products when demand becomes more elastic? (mark all that apply)

• provide coupons to consumers

• try to get more shelf space from merchants

• promote their cost saving benefits

• provide smaller sizes at a smaller price

As demand for products decreases companies may have to choose between

• switching to new products or buying cheaper materials

• raising prices or lower cost (laying off employees