Practice Elasticity Of Demand (2.3) - Theory of Demand and Supply

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6 sample questions

Question 1.
Define elasticity of demand in your own words.
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Think about how a rubber band reacts to force.
Question 2.
Give an example of elastic demand.
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Consider what you might stop buying if prices increase.
3Question 3.
What does elastic demand mean?
- A small change in price leads to a large change in demand.
- Price changes do not affect demand.
- Demand remains stable.
- Demand increases with price.
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Think about the consumer's reaction to luxury items.
4Question 4.
Is inelastic demand sensitive to price changes?
- True
- False
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Consider necessities that people always buy.
Question 5.
A company raises the price of its product by 20%, and demand decreases by 10%. Is the demand elastic or inelastic? Explain your reasoning.
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Develop a ratio comparing price changes to demand changes.
Question 6.
Consider two products: one is a necessity, and the other is a luxury. If both have a price increase of 15%, discuss the potential demand responses.
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Think about consumer priorities when prices increase.

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