question
increase in price, increase in TR
answer
inelastic
question
decrease in price, decrease in TR
answer
inelastic
question
increase in price, decrease in TR
answer
elastic
question
decrease in price, increase in TR
answer
elastic
question
increase in price, TR same
answer
unit elastic
question
decrease in price, TR same
answer
unit elastic
question
determinants of price elasticity of demand
answer
PAID-
P: the portion of income spent on a good
A: availability of close substitutes
I: importance of good
D: ability to delay purchase
P: the portion of income spent on a good
A: availability of close substitutes
I: importance of good
D: ability to delay purchase
question
inelastic items
answer
low price, no or few substitutes, necessities, can't delay purchase
question
elastic items
answer
high price, many substitutes, luxuries, can delay purhcase
question
applications of elasticity of price elasticity of demand
answer
we will tax items that are inelastic
question
elasticity of supply
answer
the seller's responsiveness of the quantity supplied to a change in price
question
elasticity of supply formula
answer
(% change in Q supplied/(sum/2))/ (% change in price/ (sum/2))
question
determinant of supply
answer
time
question
short run
answer
adding workers
question
long run
answer
starting new plant or growing more of a crop
question
cross elasticity of demand
answer
measures how sensitive consumer purchases of one product are to a change in price of another product
question
substitutes
answer
if cross elasticity is positive
question
complementary
answer
if cross elasticity is negative
question
income elasticity
answer
measures the degree to which consumers respond to a change in income by buying more or less of a good
question
increase in income, positive coefficient
answer
normal good
question
decrease in income, negative coefficient
answer
inferior good
question
cross elasticity formula
answer
% change Q of product x/ % change P of product y
question
income elasticity formula
answer
% change in Q demanded/ % change of income
question
price elasticity of demand
answer
measure of the buyer's responsiveness of the quantity demanded due to a change in price
question
inelastic demand
answer
no or little effect on quantity demanded
question
elastic demand
answer
large impact on quantity demanded
question
coefficient of elastic
answer
greater than 1
question
coefficient of inelastic
answer
less than 1
question
coefficient of unit elastic
answer
1
question
price elasticity coefficient formula
answer
% change in Q demanded/ % change in price
question
perfectly inelastic
answer
price change has no change on quantity demanded, coefficient of 0, grpahed vertival line
question
perfectly elastic demand
answer
horizontal demand
question
...
answer
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