Question

Which statement best explains how elasticity and incentives work together?

An elastic good, such as a game, is more likely to respond to incentives.
An inelastic good, such as a game, is more likely to respond to incentives.
An elastic good, such as a game, is less likely to respond to incentives.
An inelastic good, such as a game, is less likely to respond to incentives.

Answer 1

Answer: "An elastic good, such as a game, is more likely to respond to incentives."

Explanation: Elasticity measures how responsive quantity demanded is to changes (like price incentives). If demand is elastic, consumers change their buying a lot when prices or incentives change; if demand is inelastic, they change little.