Price Elasticity

Question 1

Income Elasticity of Demand

Answer 1

Measures the responsiveness or sensitivity of demand to a change in consumer income.

Question 2

What does negative YED mean

Answer 2

As income rises, damnd falls - or as income falls, demand rises

Question 3

What goods have a negative YED

Answer 3

inferior goods

Question 4

What goods have a positive YED

Answer 4

Normal goods

Question 5

What is a positive YED?

Definition

Answer 5

As income rises, more is demand.

Question 6

Price Elasticity of Demand

definition

Answer 6

Measures the responsiveness or sensitivity of the quantity demand to a change in price.

Question 7

Factors affecting the PED

Answer 7

• Availability of Substitues
• Proportion of income spent on product
• Nature of goods
• Addictive consumption
• Time period

Question 8

Price Elasticity of Supply

Answer 8

Measures the responsiveness or sensitivity of the quantity supplied to a change in price

Question 9

Factors affecting the PES

Answer 9

• Availability of stocks
• Stock hoarding ability
• Price expectations
• Time period

Question 10

Cross Price Elasticity of Demand

Answer 10

Measures the responsiveness or sensitivity of the quantity demanded of one good to a change in price of another good.