Download A. Key Terms and Concepts B. Main Ideas

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.
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