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Consulting Case Interview Practice Questions

Category - Strategy

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True or false: Price elasticity is a measure of how much the supply or demand of a good changes if the price changes.
  1. True
  2. False
Explanation
Answer: True - Price elasticity is a measure of how much the supply or demand of a good changes if the price changes. If the percentage change in quantity exceeds percentage change in price, the good is price elastic. If it is less, the good is said to be to be price inelastic.

Key Takeaway: A good approach to pricing questions where the price is already set is to attempt to find out the price elasticity.
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