If consumers are price sensitive, then A. They will have elastic demand curves.

Question

If consumers are price sensitive, then A. They will have elastic demand curves. B. They will have inelastic demand curves. C. They will have no demand curve. D. They will not shop around very much. If elasticity of demand is 4 and price is raised, A. Total revenue will fall. B. Total revenue will rise. C. Total revenue will remain constant. D. There is no way to determine whether total revenue will rise, fall, or remain constant. Demand is inelastic if A. The percentage change in quantity demanded is greater than the percentage change in price. B. The elasticity of demand is less than 1. C. The demand for the good is sensitive to changes in price. D. More units will be purchased if the price increases.

Explanation / Answer

17. OPTION A

18. OPTION A because demand is very elastic. A little increase in price would make quantity decrease by a huge amount.

19. OPTION B. I.e. when decrease in quantity demanded is less than the increase in price.

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