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Name Class Date A. Key Terms and Concepts Directions: Complete each statement with the correct term from this section. 1. If consumers will buy much less of a good after a price change, demand is . 2. When demand does not change much after a price change, demand is . 3. The amount of money a company makes from selling its goods is . 4. To determine how price changes will affect demand, economists measure . 5. When elasticity of demand is exactly 1, demand is described as 6. A good that is perceived as a even if the price rises. will be purchased B. Main Ideas Directions: Write the letter of the correct answer in the blank provided. 7. How does elasticity affect a company’s pricing policy? a. Inelastic demand tells the company that a price increase will decrease revenues. b. Elastic demand tells the company that a price increase will decrease revenues. c. Unitary elastic demand tells the company that a price decrease will decrease revenues. d. Unitary elastic demand tells the company that a price increase will increase revenues. 8. How does the price range affect the elasticity of demand for a product? a. Demand for all products is elastic if the price is low enough. b. Demand can be elastic at a low price but inelastic at a high price. c. Demand can be inelastic at a low price, but elastic at a high price. d. Price range has little effect on elasticity of demand for a good. 9. What does elasticity of demand measure? a. an increase in the quantity available b. how buyers will respond to price changes c. a decrease in the quantity demanded d. the time consumers take to change their demand 10. What effect does the availability of many substitutes have on the elasticity of demand for a good? a. Demand is elastic. c. Demand is unitary elastic. b. Demand is inelastic. d. Demand is not affected. 33 .