Micro 13 - Price elasticity of demand

Question 1

Price elastic definition

Answer 1

% change in demand is more than proportional to the % change in price

Question 2

Price elastic and inelastic diagrams

Answer 2

Question 3

Which 4 factors determine the price elasticity of demand?

Answer 3

1. Availability of substitutes.
2. Addictiveness of the product.
3. Price of product as a proportion of income.
4. Time period.