Quiz 3 Flashcards
Economists use the term ________________to describe how responsive consumers are to
price changes in the marketplace
elasticity of demand
Demand is ___________ when a change in price, either up or down, leads to a relatively larger change in the quantity demanded
elastic
Demand is ____________ when a change in price leads to a relatively smaller change in the quantity demanded
inelastic
Elastic goods and services are often said to be _____________
price sensitive
In the case of inelastic demand, changes in price have little impact on the ____________
quantity demanded
No good or service is ever really _________
unit elastic
Three things determines elasticity:
Substitute goods or services
Proportion of income
Necessities vs Luxuries
If there are no substitutes for a good or services, demand for it tends to be _________
inelastic
The percentage of your income that you spend on a good or service is another factor that affects __________
elasticity
At the same time, demand for products that cost little of your income tends to be _________
inelastic
The change in quantity demanded is smaller than the change in price, so demand is _______
inelastic
Demand for luxuries tends to be
elastic
When you calculate elasticity and the number is greater than 1, it is
elastic
When you calculate elasticity and the number is less than 1, it is
inelastic
When you calculate elasticity and the number is equal to 1, it is ________________
unit elastic
