Elasticity and Consumer Theory

Question 1

it is the responsiveness of demand due to the change of its own price

Answer 1

Own Price elasticity of Demand

Question 2

a Latin term means that all things equal

Answer 2

Ceteris paribus

Question 3

basic necessity is relatively price inelastic compared with a luxury commodity

Answer 3

True

Question 4

more substitutes, more elastic

Answer 4

True

Question 5

more uses, more elastic

Answer 5

True

Question 6

the degree of responsiveness between the degree of changes in price and changes in quantity

Answer 6

Supply/Demand Elasticity

Question 7

if the absolute value coefficient is greater than 1, then the demand is

Answer 7

Elastic

Question 8

if the absolute value coeffecient of demand is less than 1, then the demand is

Answer 8

Inelastic

Question 9

degree of responsiveness between 2 variables

Answer 9

Elasticity

Question 10

perfectly inelastic demand

Answer 10

/E/ is equal to 0

Question 11

sub x

Answer 11

commodity x

Question 12

inelastic or relatively inelastic

Answer 12

/E/ is less than 1

Question 13

unit elastic

Answer 13

/E/ is equal to 1

Question 14

elastic or relatively elastic demands

Answer 14

/E/ is greater than 1

Question 15

perfectly elastic demand

Answer 15

/e/ is equal to infinity

Question 16

used when the available figures on price and quantity are DISCRETE, and it is possible to isolate and calculate the incremental changes

Answer 16

Arc Elasticity Method

Question 17

this elasticity formula is used in order to compute large prices in real estate and properties

Answer 17

Arc Elasticity

Question 18

measures the responsiveness of the demand for a commodity due to the changes of the prices of OTHER goods and services

Answer 18

Cross Elasticity of Demand

Question 19

the coefficient of cross elasticity of demand

Answer 19

Pxy or rhoxy

Question 20

rho is less than zero

Answer 20

Complementary Goods

Question 21

rho is greater than zero

Answer 21

Substitute Goods

Question 22

rho is equal to zero

Answer 22

Independent Goods

Question 23

this elasticity is used in order to compute whether goods are normal, luxury, or inferior goods

Answer 23

Income Elasticity of Demand

Question 24

coefficient of income elasticity

Answer 24

Theta

Question 25

the relative change in quantity demand due to a percentage change in INCOME of the consumer

Answer 25

Income Elasticity of Demand

Question 26

theta is equal to one

Answer 26

Normal Good

Question 27

theta is greater than 1

Answer 27

Luxury Goods

Question 28

theta is less than 1

Answer 28

Inferior Good

Question 29

theta is equal to zero (an increase in income is not associated with a change in the demand for a good)

Answer 29

Sticky Goods

Question 30

food, water, warmth, rest

Answer 30

Physiological Needs

Question 31

security, and safety

Answer 31

Safety Needs

Question 32

intimate relationship, and friends

Answer 32

Belongingness and Love needs

Question 33

prestige and the feeling of accomplishment

Answer 33

Esteem Needs

Question 34

achieving one's full potential, including creative activities

Answer 34

Self-Actualization

Question 35

this elasticity formula is used in order to compare whether goods are substitutes or complements

Answer 35

Cross Price Elasticity

Question 36

the satisfaction of an individual in his consumption

Answer 36

Utility

Question 37

an approach wherein utility can be quantified or expressed in terms of numbers (Monetary Value)

Answer 37

Cardinal Utility

Question 38

rational people think in a margin

Answer 38

Principle 3

Question 39

as the price of commodity decreases, the consumption for that commodity increases

Answer 39

True

Question 40

an approach wherein utility can be determined from the preference of two commodities or goods

Answer 40

Ordinal Utility

Question 41

it is a concept that whenever a consumer consumes the same good, total utility increases but the marginal utility decreases

Answer 41

Principles of Diminishing Marginal Utility

Question 42

a locus of points that shows a different combination of consumption/preferences that will give consumer the same LEVEL OF SATISFACTION OR UTILITY

Answer 42

Indifference Curve

Question 43

indifference curve does not intersect and violates the concept of transitivity and consistency

Answer 43

True