Handout 3 - True/False 1.Elasticity measures how responsive...

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True/False 1.Elasticity measures how responsive quantity is to changes in price. 2.The price elasticity of demand is defined as the percentage change in price divided by the percentage change in quantity demanded. 3.In general, demand curves for necessities tend to be price elastic. 4.Goods with close substitutes tend to have more elastic demands than do goods without close substitutes. 5.The demand for desserts tends to be more inelastic than the demand for red velvet cake. 6.The demand for gasoline will respond more to a change in price over a period of five weeks than over a period of five years. 7.Suppose that when the price rises by 10% for a particular good, the quantity demanded of that good falls by 20%. The price elasticity of demand for this good is equal to 2.0. 8.The flatter the demand curve that passes through a given point, the more elastic the demand. 9.An advantage of using the midpoint method to calculate the price elasticity of demand is that it uses the metric system.
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