Flashcards in Unit 5 Deck (11):
If |E| > 1
demand is “elastic” and %ΔQ > %ΔP
If |E| = 1
demand is “unit elastic” and %ΔQ = %ΔP
If |E| < 1
demand is “inelastic” and %ΔQ < %ΔP
the more close substitutes there are for a good...
the more elastic (price sensitive) is the demand
the more broadly defined the category is...
then the fewer number of substitutes and the more inelastic is the demand
the longer the time frame is...
the more time there is to find substitutes, which makes demand more elastic
the more of a necessity a good is...
the fewer substitutes it has and the more inelastic is its demand
the more of a luxury a good is...
the more substitutes it has, and thus the more elastic is its demand
the larger the proportion of your budget spent on a good...
the more elastic (price sensitive) is demand
If EXY < 0, then X and Y...