Title: Explaining Elasticity
Course: TEST Course

Q: Elasticity refers to
- how frequently a demand curve or supply curve changes slope.
- how long it takes a market to reach equilibrium.
- how responsive one variable is to changes in another.
A: how responsive one variable is to changes in another.

Q: Elasticity allows economists to measure
- how firms can maximize profits.
- the frequency of shifts in demand.
- the responsiveness of one variable to changes in another variable.
A: the responsiveness of one variable to changes in another variable.

Q: If a small change in price creates a large change in demand, then we would say that the demand is
- inelastic.
- stagnant.
- elastic.
A: elastic.

Q: Demand is ________ if a small change in price creates a large change in demand.
- inelastic
- stagnant
- elastic
A: elastic

Q: If a large change in price results in a small change in demand, then demand is
- elastic.
- stagnant.
- inelastic.
A: inelastic.

Q: Demand is ________ if a large change in price causes a small change in demand.
- elastic
- stagnant
- inelastic
A: inelastic

Q: Which of these questions is the best example of elasticity?
- What is the least amount of goods a supplier can produce without upsetting the customers?
- How will a change in consumer behavior affect the overall consumer experience?
- How much will a change in price or quantity impact consumer and producer behavior?
A: How much will a change in price or quantity impact consumer and producer behavior?

Q: An addicted smoker likely has which type of demand?
- elastic
- constant
- inelastic
A: inelastic

Q: Elasticity measures the behavioral response of economic agents in a given situation. Which of the following questions is likely to be answered using elasticity?
- If hot dogs go on sale, will it affect the price of bread?
- If you get a pay raise, are you more productive at work?
- If a business raises its prices, will that have a large or small impact on demand?
A: If a business raises its prices, will that have a large or small impact on demand?

Q: Elasticity measures the behavioral response of economic agents in a given situation. Which question is likely to be answered using elasticity?
- If a business raises its prices, are they utilizing new technology?
- Does on-demand Internet streaming media cause more people to stay home?
- If a restaurant puts their pizza on sale, will the additional number of pizzas sold offset the discount on each item? Will their sales revenues for pizza go up or down?
A: If a restaurant puts their pizza on sale, will the additional number of pizzas sold offset the discount on each item? Will their sales revenues for pizza go up or down?

Q: Determining the price elasticity of demand involves all of the following factors, but NOT
- the availability of substitutes.
- whether or not something is a luxury or a necessity.
- the total number of firms in a market.
A: the total number of firms in a market.

Q: Which of the following factors does NOT influence the price elasticity of demand of a product?
- share of the consumer budget
- short run versus long run
- the slope of the supply curve
A: the slope of the supply curve

Q: A product is considered relatively elastic ________.
- when it takes up a small share of the consumer’s budget
- in the short run
- when there are many substitutes
A: when there are many substitutes

Q: A product is considered relatively inelastic ________.
- when there are many substitutes
- in the long run
- when there is only one supplier
A: when there is only one supplier

Q: Demand is relatively inelastic if ________.
- the demand curve is horizontal
- there are numerous suppliers
- buyers do not respond much to a change in price
A: buyers do not respond much to a change in price

Q: If buyers do not respond much to a change in price, then demand is considered
- relatively elastic.
- fairly elastic.
- relatively inelastic
A: relatively inelastic

Q: Which of the following describe a product with an inelastic demand?
- A pair of walking shoes.
- Computer tablet for surfing the internet.
- An appointment with a dentist.
A: An appointment with a dentist.

Q: Which of the following describe a product with an elastic demand?
- A pack of cigarettes for a chain smoker.
- An appointment with a dentist.
- Computer tablet for surfing the internet.
A: Computer tablet for surfing the internet.