1. Multiple Choice: If the price elasticity of demand for a product is less than one, we say the demand is: a) Elastic b) Inelastic c) Unitary d) Perfectly elastic Answer: b) Inelastic Rationale: Price elasticity of demand less than one indicates that the percentage change in quantity demanded is less than the percentage change in price, hence, demand is inelastic. 2. True/False: A Giffen good is a product that people consume more of as the price rises, violating the basic laws of demand. Answer: True Rationale: A Giffen good is an inferior good with an upward-sloping demand curve, which means as the price increases, the quantity demanded also increases.