Name:

I. Identify if demand is elastic, inelastic, unitary, perfectly inelastic or perfectly elastic.

__________1. Products which are urgently needed as necessities are likely to possess relatively
what demand?
__________2. What kind of demand do luxuries, such as expensive jewelries may be expected
to have?
__________3. What kind of demand is illustrated if price falls total revenue moves in the
opposite direction?
__________4. A product which has many substitutes is said to have what demand?
__________5. If the value of elasticity coefficient is 0.25, what kind of elasticity is illustrated?
__________6. If elasticity coefficient is 2.5, what kind of elasticity does a product possess?
__________7. When total revenue increases after an increase in the price, the elasticity of
demand is?
__________8. Whenever total revenue remains the same after a change in price, the elasticity
of demand is?
__________9. What kind of demand if the value of the elasticity coefficient is zero?
__________10. What kind of demand do products with large number of substitutes may be
expected to have?

II. Compute for the elasticity coefficient of demand and identify whether the demand
is elastic, inelastic or unitary demand.
1. P1=100, Q1=85 2. P1=45, Q1=50
P2=200, Q2=70 P2=30, Q2=20

III. 1. Suppose the supply and demand equations are the following

Qd = 20 – 2P and Qs = -10 + 2P

1.1. Compute the equilibrium price and quantity.

1.2. At price 10, is there a surplus or shortage? How many units?
1.3. At price 5, is there a surplus or shortage? How many units?