Chapter 4

Question 1

cross elasticity of demand

Answer 1

responsiveness of demand when substitutes/complements change; %ΔQD/%ΔQS

Question 2

elastic demand

Answer 2

demand with price elasticity > 1

Question 3

elasticity of supply

Answer 3

responsiveness of supply when prices change

Question 4

income elasticity of demand

Answer 4

responsiveness of demand when income changes; %ΔQD/%ΔI

Question 5

inelastic demand

Answer 5

a demand with a price elasticity between 0 and 1; the percentage change in the quantity demands is less than the percentage change in price

Question 6

perfectly elastic demand

Answer 6

quantity demanded changes infinitely to tiny price change

Question 7

perfectly inelastic demand

Answer 7

quantity demanded is constant regardless to price

Question 8

price elasticity of demand

Answer 8

responsiveness of quantity demanded when price changes

Question 9

total revenue

Answer 9

value of a firm’s sales; P x Q

Question 10

unit elastic demand

Answer 10

demand price elasticity = 1