Question

1. what happens to quantity demanded when the price of an elastic good increases?

part c: scenario - based questions (14–15)

read carefully and answer fully.

1. the price of gasoline increases, but people continue to buy almost the same amount.

a) is gasoline demand elastic or inelastic?
b) why?

Explanation:

1. For elastic goods, quantity demanded is highly responsive to price changes. When price rises, quantity demanded falls sharply.

14a. Inelastic demand means quantity demanded changes little when price changes, which matches the gasoline scenario.
14b. Gasoline is a necessity with few short-term substitutes, so consumers can't reduce purchases much when price increases.

Answer:

1. The quantity demanded will decrease significantly (by a larger percentage than the price increase).

14a) Inelastic
14b) Gasoline is a necessity with very few viable short-term substitutes, so consumers cannot easily reduce their consumption even when the price increases.