4
practice testMultiple Choice

Practice Test

Question 4 • Personal Finance and Economics

What does elasticity measure in economics?

Answer
A
how the amount of a good changes when the producer uses new materials
B
how the amount of a good changes when the producer hires more employees
C
how the amount of a good changes when its distribution expands
D
how the amount of a good changes when its price goes up or down

Explanation

Elasticity measures how responsive the quantity of a good is to a change in price. For example, it describes how much the amount consumers buy changes when the price rises or falls. So the correct choice is “how the amount of a good changes when its price goes up or down.”

AI-written and checked against the verified answer.

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