Chapter 4

Question 1

Income Effect

Answer 1

Change in demand caused by change in income

Question 2

Substitution Effect

Answer 2

Change in demand caused by change in relative prices

Question 3

Price Elasticity of Demand

Answer 3

The responsiveness of demand to a change in price

Question 4

Inelastic Demand

Answer 4

Demand is unresponsive to a change in price

Question 5

Elastic Demand

Answer 5

Demand is responsive to a change in price

Question 6

Income Elasticity of Demand

Answer 6

The responsiveness of demand to a change in income

Question 7

Cross-price Elasticity of Demand

Answer 7

the responsiveness of demand for one good to change in the price of another good

Question 8

Time Series

Answer 8

A set a data collected regularly over a period of time

Question 9

Seasonal Variation

Answer 9

Regular pattern of demand changes the apparent at different times of year

Question 10

Extrpolation

Answer 10

Extending time-series data into the future based on trend

Question 11

Delphi Technique

Answer 11

Finding consensus view of experts

Question 12

Price Elasticity of Demand (and formula)

Answer 12

• Responsiveness of change in price to change in demand

= change in demand/change in price *100%

change in demand = (new - old)/(new + old)/2 *100%

same thing for price