chapter 5

Question 1

what is price elasticity of demand

Answer 1

percentage change in quantity demanded/percentage change in price

Question 2

when is demand elasticity is elastic, şnelastic and unit elastic

Answer 2

elastic- ed>1
iinelastic<1
unit elastic=1

Question 3

what happens when a demand is inelastic and elastic

Answer 3

inelastic- total revenue increases-price will increase more, quantity decrease less
elastic- total revenue decreases- price will increase less, quantity will decrease more

Question 4

what is the formula of total revenue

Answer 4

TR=P*Q

Question 5

what are the three primary reasons for elasticity differences

Answer 5

1-1closeness of substitutes
2- budget spent on the good
2- available time to adjust

Question 6

what is the consumer surplus

Answer 6

is the sum of the area of rectangle and triangle

Question 7

what is the cost of subsidy

Answer 7

devletin yaptığı yardım- per-unit subsidy* the number of unit consumed.