AWS: ELB
1:What best describes the purpose of an Elastic Load Balancer?

An ELB is used BEST when it is distributing traffic to EC2 instances located in separate Availability Zones. This provides for higher availability and is more fault tolerant than distributing traffic to EC2 instances in the same AZ.

AWS:ELB
3: Elasticity is a primary benefit of using Auto Scaling.

AWS:ELB
5: What is the proper solution you should enact to prevent your application from crashing due to a sudden increase in demand?
Auto Scaling is what provides your architecture with the ability to automate the process of adding more instances to avoid crashes (if the case of sudden increase in demand). Scaling polices are PART of Auto Scaling but are not the overall solution.

7: What best describes a scaling policy?

Scaling policies belong to the Auto Scaling group. The policies themselves dictate (via chosen CloudWatch metrics thresholds) when instances should be added or removed.

9: What happens when an EC2 instance that is being served traffic from an ELB becomes unhealthy?

The ELB will stop serving traffic to it and divert it's traffic to a healthy instance – as this is all it can do. It is Auto Scaling which can take an unhealthy instance, terminate it, and replace it with a new instance.