Week 2

Question 1

complements

Answer 1

When a fall in the price of one good increases the demand for another good, the two goods are called

Question 2

substitutes

Answer 2

When a fall in the price of one good decreases the demand for another good, the two goods are called

Question 3

As income increases…

Answer 3

the demand for an inferior good will decrease.

the demand for a normal good will increase.

Question 4

Elasticity

Answer 4

… is a measure of how much buyers and sellers respond to changes in market conditions
… allows us to analyse supply and demand with greater precision

Question 5

Substitutes

Answer 5

Large number of substitutes increase elasticity

Question 6

Necessities

Answer 6

Inelastic

Question 7

Luxury

Answer 7

Elastic

Question 8

Inelastic
Unit Elastic
Elastic

Answer 8

<1
= 1
> 1

Question 9

Midpoint formula

Answer 9

Calculate price elasticity demand

Question 10

Steeper the slope..

Answer 10

Lower the elasticity

Question 11

Perfectly inelastic demand

Answer 11

an increase in price leaves quantity demanded unchanged

Question 12

Inelastic

Answer 12

When price falls, demand goes up, when price goes up demand goes down but only a little bit..because very few substitutes

Question 13

Coeffeciency

Answer 13

Change in quantity/Change in price

Question 14

Elastic

Answer 14

Quantity is sensitive is change to price

Big change in quantity, in small change in price

Question 15

Unit elastic

Answer 15

Coeffecient is 1

Increase in price has no effect in quantity

Question 16

If I look like an i

Answer 16

Inelastic