Question

9.

Which would be more INelastically demanded?

		A.  Insulin (from any location)
		B.  Insulin obtained from Walmart's pharmacy 10.

You will be relatively more price elastic for something that takes up a smaller share of your budget. T/F

11.The longer time you have to adjust to an increase in price, the more price inelastic you will be. T/F

12.

The price of good X increases but consumers do not change the quantity that they are purchasing. This is an example of:

		A.  perfectly elastic demand
		B.  perfectly inelastic demand
		C.  unitary elastic demand
		D.  very inelastic demand
		E.  very elastic demand 13.

A firm can lower its price and make more money when consumers are inelastic.T/F

15.You go skiing with your friends and you realize you have left your ski goggles at home. You have 20 minutes to grab some at the local ski shop. At this point your demand is highly elastic.T/F

Answer 1

(9) (A)

The broader (narrower) the scope of the good, the more inelastic (elastic) its demand is.

(10) F

The larger (smaller) the proportion of budget that a good occupies, the more elastic (inelastic) its demand.

(11) F

A good is inelastic in short run but elastic in long run because consumers get more time to switch to substitutes in long run.

(12) (B)

When demand is perfectly inelastic, quantity demanded does not change with a change in price. Demand curve is vertical.

(13) F

When demand is inelastic, a fall (rise) in price will decrease (increase) total revenue.

(15) F

Since I have no immediate substitutes right now, my demand is highly inelastic.