4.1.3

Question 1

define what a market means

Answer 1

interaction of buyers & sellers to determine the price of goods/services and the quantity purchased

Question 2

describe trend of price (x) + quantity (y) graph demand curve

Answer 2

linear straight line
-ve relationship
as price decreases, quantity increases

Question 3

what do consumers do in a market

Answer 3

demand

Question 4

define price elasticity of demand

PED

Answer 4

how responsive demand is to a change in price

Question 5

PED equation

Answer 5

% change in quantity demand / % change in price

Question 6

what does expansion mean

Answer 6

decrease

Question 7

what does shift mean

Answer 7

increase

Question 8

how to calc % change

Answer 8

(diff. between 2 figures / first figure) x 100

Question 9

PED : what does it mean when a change in price is responsive to a change in demand

Answer 9

elastic

OVER 1

Question 10

PED : what does it mean when a change in price leads to a small change in demand

Answer 10

inelastic

UNDER 1

Question 11

LIST 1 : why can the demand curve shift?

Answer 11

• population increase
• income increase
• increase in advertising
• seasonal changes
• price of substitute goes up
• price of complement goes down
• tax decrease

Question 12

LIST 2 : which factors affect elasticity of demand?

Answer 12

• availability of substitutes
• time (can make demand more elastic)
• habit forming
• proportion of income spent
• brand loyalty

Question 13

define income elasticity of demand

YED

Answer 13

how changes in income affect demand

Question 14

what are +ve values over 0 called for YED

Answer 14

normal goods

Question 15

what are -ve values under 0 called for YED

Answer 15

inferior goods

Question 16

what are values past -1 or past 1 called for YED

Answer 16

elastic

Question 17

what are values of 0 called for YED

Answer 17

inelastic

Question 18

income elasticity of demand equation

YED

Answer 18

% change in quantity demanded / % change in income

Question 19

define cross elasticity of demand

XED

Answer 19

how demand changes as other firms change their prices

Question 20

cross elasticity of demand equation

XED

Answer 20

% change in quantity of A / % change in price of B

Question 21

what are values at 0 called for XED

Answer 21

inelastic

Question 22

what are values over called for XED

Answer 22

SUBSTITUTES

competitive demand

Question 23

what are values over 1 called for XED

Answer 23

elastic

Question 24

what are values under 0 called for XED

Answer 24

COMPLEMENTS

joint demand

Question 25

what are values under -1 called for XED

Answer 25

elastic

Question 26

CHECK PG. 4.1.3.3

Answer 26

CHECK PG. 4.1.3.3

Question 27

price elasticity of supply

SES

Answer 27

% change in quantity supplied / % change in price

Question 28

for price elasticity of supply curve graph:

what does it mean when straight line intercepts y axis?

Answer 28

elastic in supply

value greater than 1

Question 29

for price elasticity of supply curve graph:

what does it mean when straight line passes through origin?

Answer 29

neutral elasticity

Question 30

for price elasticity of supply curve graph:

what does it mean when straight line intercepts x axis?

Answer 30

inelastic in demand