This quick check focuses on **price elasticity of demand**. Answer each scenario-based question to identify whether demand is elastic or inelastic and why.
Gasoline Prices
Gas prices rise from $4.00 to $4.50 per gallon. Most people continue buying about the same amount of gasoline because they still need to drive to work.
Demand for gasoline in this situation is:
Movie Theater Tickets
A theater raises ticket prices from $10 to $15. Many customers decide to stay home and watch movies on streaming services instead.
Demand for movie tickets is likely:
Insulin
The price of insulin increases significantly, but people who need it continue purchasing nearly the same amount.
Demand for insulin is most likely:
Fast Food Burgers
A fast food restaurant increases the price of burgers from $3 to $5. Customers easily switch to tacos, pizza, or other nearby options.
Demand for burgers is:
Substitutes
A product tends to have elastic demand when:
Necessities vs. Luxuries
Which good is MOST likely to have inelastic demand?
Time to Adjust
Gasoline demand becomes more elastic over time because:
Coffee Shop Prices
A coffee shop raises prices from $4 to $5. Many customers stop buying coffee there, and the shop earns less total revenue.
Demand in this situation is:
Concert Tickets
A famous artist raises ticket prices slightly. Fans still buy nearly all the tickets and total revenue increases.
Demand is likely:
Cigarette Tax
The government places a tax on cigarettes. Most smokers continue buying cigarettes even though the price rises.
Demand for cigarettes is likely: