Praxis II Citizenship

Answer: B - If the quantity of a product changes quickly in response to a change in the price of the product the demand for that product is elastic. Studying a product’s elasticity is a way of evaluating supply and demand for the product in terms of its retail price. The cut-off point for differentiating between elasticity and inelasticity is generally a change of one percent or more in demand. For example, if the price of widgets is raised by five percent and the demand for widgets decreases by three percent, widget demand would be considered elastic. Conversely, if the price of thingamajigs increased by 15 percent and the demand for thingamajigs only decreased .25 percent, thingamajig demand would be considered inelastic.