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Questions and Answers
When is demand for a good considered inelastic?
When is demand for a good considered inelastic?
- When the elasticity is negative
- When the elasticity is equal to zero
- When the elasticity is greater than one
- When the elasticity is less than one in absolute value (correct)
What does a price elasticity of -2 indicate?
What does a price elasticity of -2 indicate?
- A one percent price rise leads to a two percent increase in quantity demanded
- A two percent price rise leads to a one percent decline in quantity demanded
- A one percent price rise leads to a two percent decline in quantity demanded (correct)
- A two percent price rise leads to a one percent increase in quantity demanded
What does 'more elastic' mean in terms of price elasticity?
What does 'more elastic' mean in terms of price elasticity?
- A good's elasticity has smaller magnitude, ignoring the sign
- A good's elasticity has greater magnitude, ignoring the sign (correct)
- A good's elasticity has smaller magnitude, considering the sign
- A good's elasticity has greater magnitude, considering the sign
Which goods are rare exceptions to the law of demand with positive elasticity?
Which goods are rare exceptions to the law of demand with positive elasticity?
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What does a negative price elasticity indicate?
What does a negative price elasticity indicate?
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