Elasticity

Question 1

Define Elasticity

Answer 1

Elasticity measures the responsiveness of one variable to the change in another variable.

Question 3

What is the formula for PED

Answer 3

%Change in Quantity demanded/%change in price

Question 4

Define PED

Answer 4

Price Elasticity of demand

Question 5

A good is Unitary When

Question 6

A good is elastic when…

Question 7

A good is inelastic when

Question 8

PED is almost always

Question 9

When a good is perfectly elastic…

Answer 9

When PED =∞
A fall in Price will cause an infinate increase in Quantity demanded
Whilst A rise in price will make Quantity Demanded fall to zero

Question 10

when a good is perfectly inelastic..

Answer 10

PED=0
Quantity demanded doesn’t Change as price increases

Question 11

Define XPED

Answer 11

Cross-price Elasticity of Demand

Question 12

What is the formula for XPED

Answer 12

%Change in Quantity demanded of good A/
%Change in price of good B

Question 13

A substitute good is when…

Question 14

A complementary good is when

Question 16

substitute goods are..

Answer 16

Positive

Question 17

complimentary goods are..

Answer 17

Negative

Question 18

Define YED

Answer 18

Income Elasticity if Demand

Question 19

What is the formula for YED

Answer 19

%Change in Quantity demanded/%Change in income .

Question 20

A normal good is…

Question 21

A inferior good is when

Question 22

What is the relationship between PED and revenue when price is INELASTIC

Question 23

What is the relationship between PED and revenue when price is ELASTIC

Question 24

What does EOIS mean

Answer 24

E-lastic
O-pposite
I-nelastic
S-ame

Question 25

What is a Giffen Good

Answer 25

A special type of inferior good where
Demand increases as Income increases.