T4

Question 1

Define PES

Answer 1

Price elasticity of supply measures the responsiveness of supply after a change in price

Question 2

what effects the PES of a product?

Answer 2

Availability of resources, production technology, the time taken to produce ikt

Question 3

Define YED

Answer 3

YED measures how quantity demanded of a good responds to changes in consumer income

Question 4

What is the formula for YED?

Answer 4

YED = % change in Quantity Demanded/% change in income

Question 5

Define XED

Answer 5

(XED) Cross elasticity of demand, measures how the quantity demanded for one good responds to a change in the price of another good

Question 6

formula for XED

Answer 6

% change in QD/ % change in price of Good B

Question 7

What is Market Failure?

Answer 7

When a free market doesn’t allocate resources efficiently, leading to a loss of economic welfare

Question 8

What are the three types of market failure?

Answer 8

Externalities, Public Goods, Information Gaps

Question 9

Define a Public Good

Answer 9

a good that is non-rivalrous and non- excludable