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Text:
"" The extent to which demand changes with price is known as "price elasticity of demand." Inelastic products are products that people will buy the same amount of no matter what the price is. These products are usually goods that are essential for one's life, like electricity, gas or even medicine.
On the other hand, elastic products are very price-sensitive in that they are highly dependent on the price they sell for. Luxury goods and services, along with other non-essential products, are extremely elastic. When the price goes up, people tend to buy less and when the price goes down, people tend to buy more.
To better understand this concept, let's use an example. Personally, I like to eat pizza once in a while. Very often, I will be too lazy to go out, so I will just thaw a frozen pizza directly from my freezer. The thing is, frozen pizzas can be very expensive, costing nearly 10$ a piece. Luckily, groceries have flyers which sometimes offer pizza for prices as low as 3$! When this happens, I quickly stack up on frozen pizza in my freezer and you can be sure many customers are doing the exact same thing. This is a great example of an elastic product. "
Question:
1. What is a great example of an elastic product?
a) Gas b) Electricity c) Frozen Pizza d)Water
2. Pizzas can sometimes be very expensive.
a) True b)False
3. People will buy the same amount of elastic products, no matter their income.
a)True b)False
4. The extent to which demand changes with price is known as...
a) Import & Export b) Frozen pizza price c) Price elasticity of demand d)Luxury goods & services
5. For luxury goods, when the price goes up, people tend to buy...
a) More b)Less c) The same amount
*****ANSWERS******
1. C)
2. A)
3. B)
4. C)
5. B)
