A Product with an Elastic Demand Means That

question 64

Multiple Choice

A product with an elastic demand means that

• A)consumers are relatively insensitive to a change in the quantity demanded.
• B)consumers are relatively insensitive to a change in the price of the product.
• C)consumers are relatively sensitive to a change in the price of the product.
• D)producers are relatively insensitive to a change in the price of the product.
• E)producers are relatively sensitive to a change in the quantity demanded.

---

Definitions:

Marginal Cost

The increment in comprehensive expenses related to the generation of an extra unit of a good or service.

Total Benefit

The entire satisfaction or value derived from consuming a good or service.

Optimal Quantity

The quantity of production that maximizes a firm's profit or minimizes its costs under certain conditions.

Free-Rider Problem

The inability of potential providers of an economically desirable good or service to obtain payment from those who benefit, because of nonexcludability.