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PED Flashcards

(36 cards)

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1
Q
  1. PED里面，分母是什么？
A

percentage change in price, 价格变化的百分比

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2
Q
  1. what’s wrong with the following statement?

if PED = -3, this means demand is price inelastic. For a percentage change in price, demand drops by 3%

A

if PED = -3, this means demand is price inelastic.** For a percentage **change in price, demand drops by 3%

应该是elastic

改成 percentage increase in price,这样更合适

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3
Q
  1. what’s wrong with the following statement?

if PED = 0.5, this means demand is price inelastic. For a percentage increase in price, demand drops by 0.5 unit

A

if PED = 0.5, this means demand is price inelastic. For a percentage increase in price, demand drops by 0.5 unit

  1. PED 应该是 -0.5，as long as the law of demand is satisfied, PED is negative
  2. demand drops by 0.5%, not 0.5 unit. PED没有单位，PED的分子分母都是一个百分比的数字
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4
Q
  1. what’s wrong with the following statement

if PED = -2, this means demand is price elastic. For 1% increase in price, demand will change by 2%

A

if PED = -2, this means demand is price elastic. For 1% increase in price, demand will change by 2%

Correction:

demand will decrease by 2%

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5
Q
  1. Apple the fruit has a PED of -1.5, what do you expect the absolute value of PED of the following good when compared to apples?

Do you expect the demand curve for the following good to be steeper or flatter compared to apple’s demand curve?

Luxury goods such as designer bags and sports car

A

Luxury goods are more price elastic, its |PED| value is larger. Its demand curve will be flatter.

Because luxury goods are expensive and they take up a large proportion of people’s income.

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6
Q
  1. Apple the fruit has a PED of -1.5, what do you expect the absolute value of PED of the following good when compared to apples?

Do you expect the demand curve for the following good to be steeper or flatter compared to apple’s demand curve?

Salt

A

salt more price inelastic. |PED| value is smaller, its demand curve will be steeper

Because salt is a necessity and it takes up only a small proportion of people’s income.

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7
Q
  1. Apple the fruit has a PED of -1.5, what do you expect the absolute value of PED of the following good when compared to apples?

Do you expect the demand curve for the following good to be steeper or flatter compared to apple’s demand curve?

红富士苹果

A

红富士 more price elastic, its |PED| value is larger. Its demand curve will be flatter.

Because within the apple cetegory, people can choose among 红富士 and other brands

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8
Q
  1. Apple the fruit has a PED of -1.5, what do you expect the absolute value of PED of the following good when compared to apples?

Do you expect the demand curve for the following good to be steeper or flatter compared to apple’s demand curve?

Medicine

A

Medicine is more price inelastic. |PED| value is smaller. Its demand curve will be steeper

Because medicine is a necessity and there is few substitudes

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9
Q
  1. PED = -0.2: in order to raise revenue, 要 raise price or drop price?
A

Raise price

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10
Q

10. PED = -3: in order to raise revenue, 要 raise price or drop price?

A

drop price

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11
Q

11. PED = 0

in order to raise revenue, 要 raise price or drop price?

A

can raise price as much as you like.

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12
Q

12. PED = - ∞

in order to raise revenue, 要 raise price or drop price?

A

不能涨价，因为一涨价 ，Qd马上无限下降，就是归为0.

也不需要降价，因为在原来的price，就有无限的demand

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13
Q

13. PED = - ∞

叫做什么, demand curve的样子？

A

perfectly elastic

D curve是一条横线

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14
Q

14. PED = -1

叫做什么, demand curve的样子？

A

unitary elastic

D curve是一条弯弯的线

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15
Q

15. PED = 0

叫做什么, demand curve的样子？

A

perfectly inelastic

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16
Q

16. PED = - 0.8

in order to raise revenue, 要 raise price or drop price?

Study These Flashcards
A

不能涨价，因为一涨价 ，Qd马上无限下降，就是归为0.

也不需要降价，因为在原来的price，就有无限的demand

17
Q

17. PED = - 1

in order to raise revenue, 要 raise price or drop price?

Study These Flashcards
A

doesn’t matter. Because revenue will stays unchanged

18
Q
  1. 给下面的句子挑毛病

when PED is 0.8, this means when price change by 1, demand increases by 0.8

Study These Flashcards
A

when PED is 0.8**, this means when price change by **1**, **demand increases by 0.8

改错：

PED = -0.8. price increases by 1% (分母是一个百分比数字), quantity demanded (demand curve movement, not shift) decreases by 0.8%

19
Q

19.

Price elasticity of demand is an extremely useful tool in economics because

(A) it indicates the equilibrium price

(B) it predicts the market forces of supply and demand

(C) it shows how consumer behavior is affected by price

20
Q

20

The price of peaches increases 30 percent. As a result, quantity demanded

for plums increases from 50 to 80. What is the price elasticity of demand for

peaches and plums?

(A) 2

(B) –2

(C) 0.5

(D) –0.5

(E) 1

Study These Flashcards
A

Choice (A) is correct. Quantity demanded increased from 50 to 80, which is a 60 percent increase. Dividing 60 percent by 30 percent results in a price elasticity of demand of 2.

These are substitute goods.

21
Q
  1. The formula for the price elasticity of demand
Study These Flashcards
A

% △ Qd / % △ P

22
Q
  1. If the quantity demanded changes proportionately more than the price, we say that demand is price …..
Study These Flashcards
A

price elastic

23
Q
  1. If the quantity demanded changes proportionately less than the price, we say that demand is
Study These Flashcards
A

price inelastic

24
Q

24 选择正确答案

Demand will be more elastic (the greater / the less) the number and closeness of substitute goods

25
25 选择正确答案 Demand will be more price elastic **_(the higher/the lower)**_ the proportion of income spent on the good and the _**(longer/the shorter)_** the time period that elapses after the change in price.
the higher; the longer
26
26. The price elasticity of demand for holidays abroad (in general) is likely to be high because ## Footnote A. people tend to book up a long time in advance. B. there are plenty of different foreign holidays to choose from. C. foreign holidays are an expensive luxury. D. holidays at home provide no real alternative. E. people need a holiday if they are to cope with the year ahead.
C Note that B would only be an answer if we were talking about a specific foreign holiday rather than foreign holidays in general.
27
27. True or false ## Footnote Curve D2 is price elastic.
FALSE. 一条直线的demand curve永远都有 inelastic和elastic的部分，PED一直在变化。我们可以说**D2 is more price elastic when compared to D1, for a certain range of price**
28
28. True or false ## Footnote Curve D1 has a price elasticity of −1..
FALSE. 一条直线的demand curve永远都有 inelastic和elastic的部分，PED一直在变
29
29. True or false ## Footnote At point y, curve D2 has an elasticity of infinity.
TRUE. 直线的demand curve，跟y轴相交的那个点，PED是 - ∞。 跟x轴的交点，PED是0
30
30. True or false ## Footnote At point x, curve D1 has an elasticity of zero.
TRUE. 直线的demand curve，跟y轴相交的那个点，PED是 - ∞。 跟x轴的交点，PED是0
31
31. True or false ## Footnote Curve D2 is more elastic than curve D1
false. 因为不够准确。如果我们拿D2与x轴的交点(perfectly inelastic)，和D1与y轴的交点(perfectly elastic)，那么D1就更加elasitc 准确的说法应该是： Curve D2 is more elastic than curve D1 **over any given price range.**
32
32. True or false ## Footnote At point z, the two curves have the same price elasticity.
false. given the same price, flatter always more price elastic
33
33. What will be PED where total expenditure is the maximum?
PED = -1
34
34. When the price elasticity of demand for a good is −1.4, then a rise in the price will result in fewer goods being sold but greater consumer expenditure
false.
35
35. When demand is price inelastic, total expenditure will vary directly with price but inversely with quantity demanded.
true.
36
36. The elasticity of a straight-line demand curve will fall as you move down the curve, from infinity at the point where it intersects the vertical axis to zero at the point where it intersects the horizontal axis.
true

AP (2 decks)

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