Price Elasticity Of Demand Quiz

If you slow down buying because of a price increase, it indicates that your demand is elastic. This means that you are sensitive to changes in price and your purchasing behavior is responsive to price fluctuations. When the price increases, you reduce your quantity demanded, which suggests that your demand is elastic.

Life-saving medicine is an example of a good with inelastic demand because it is a necessity for individuals who need it to survive or improve their health. The demand for life-saving medicine is not significantly affected by changes in price, as people are willing to pay any price to obtain it. The availability of substitutes is limited, making the demand for this good relatively inelastic. In contrast, goods like fresh lobster, HD flat panel TV sets, and laptop computers are not necessities and have more elastic demand, as consumers have more options and can easily switch to alternatives.

If a good has a lot of substitutes, it means that there are many alternative products that consumers can choose from. This gives consumers the flexibility to switch to other options if the price of the good in question increases. As a result, even a small change in price will lead to a significant change in the quantity demanded, making the demand for the good elastic. Therefore, the correct answer is elastic.

Bill Gates, being a billionaire, has a high purchasing power and can afford to buy a Maybach without considering the price. In this scenario, the demand for a Maybach is likely to be inelastic because even if the price of the car were to increase, it would not significantly affect Bill Gates' decision to purchase it. The demand for a product is considered inelastic when the change in price has a minimal impact on the quantity demanded.

This answer suggests that the demand for Starbucks coffee is extremely inelastic. This means that even when the price of a cup of coffee increased by 5 cents, the quantity demanded did not significantly change. In other words, consumers are willing to pay a higher price for Starbucks coffee regardless of the increase in cost. This indicates that Starbucks has a strong and loyal customer base who are willing to pay a premium for their products.

Total revenue is the total amount of money a company generates from selling its goods or services. It represents the income received by the company before any expenses or deductions, such as taxes, are taken into account. It is a measure of the company's sales performance and indicates the overall financial health of the business.

If you spend a very small proportion of your income on a product, it means that the price of the product does not significantly affect your purchasing decision. This suggests that the demand for the product is price inelastic, as even a change in price will not greatly impact your decision to buy the item.

The demand for the Mercedes Maybach luxury car is expected to be elastic because it is a high-priced product. When the price of a luxury car increases, the demand for it tends to decrease as consumers have more alternatives and are more price-sensitive. Therefore, a small change in price is likely to have a significant impact on the quantity demanded, making the demand elastic.

When the percentage change in the price exceeds the percentage change in quantity demanded, it indicates that demand is inelastic. This means that the quantity demanded is not very responsive to changes in price. In other words, even if the price increases or decreases, the quantity demanded remains relatively stable. This suggests that consumers are not very sensitive to price changes and are willing to pay the higher price without significantly reducing their demand for the product.

A graph that shows a product with elastic demand will tend to be flatter. This is because elastic demand means that a small change in price will result in a relatively larger change in quantity demanded. As a result, the demand curve will be more responsive to price changes, leading to a flatter slope. A flatter demand curve indicates that consumers are more sensitive to price changes and will adjust their quantity demanded significantly in response to even small price changes.