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What is Elasticity in Economics? - Definition, Theory & Formula

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question 1 of 3

According to the theory of elasticity, if the price of a product increase, what happens?

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1. When is the following formula used: %Change in quantity / %change in price.

2. True or false: changes in income can affect the quantity demanded.

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About This Quiz & Worksheet

These study resources will discuss elasticity in economics. The quiz and worksheet will assess your understanding of topics such as what happens when the price of a product increases and identifying when the formula '%Change in quantity / %change in price' is used.

Quiz & Worksheet Goals

This quiz and worksheet will get you to:

  • Know whether or not changes in income can affect the quantity demanded
  • Determine what is meant by 'ceteris paribus'
  • Identify a main disadvantage of using elasticity measures to assist with decision making

Skills Practiced

With this quiz and worksheet you will practice the following:

  • Making connections - use understanding of the concept of changes in income and how it is connected to the quantity demanded
  • Critical thinking - apply relevant concepts to examine information about what happens when the price of a product increases
  • Interpreting information - verify that you can review information regarding ceteris paribus and interpret it correctly

Additional Learning

Review the lesson entitled What is Elasticity in Economics? - Definition, Theory & Formula to further explore this topic. Once you have finished this lesson, you will have addressed the following:

  • Define elasticity
  • Determine what is an elastic product and what is an inelastic product
  • Understand income elasticity of demand
  • Interpret elasticity calculations
  • Recognize the advantages and disadvantages of using elasticity
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