3.3.2 Flashcards
1
Q
If a product has an elasticity coefficient of -0.9 is it price elastic or inelastic?
A
Inelastic
2
Q
What is the formula of price elasticity of demand?
A
%change in quantity demanded
———————————————
%change in price
3
Q
Income elasticity of demand formula?
A
%change in quantity demanded
——————————————-
%change in real income
4
Q
What does price of elasticity mean?
A
How much the price change affect the demand.
5
Q
What is income elasticity of demand?
A
Shows how demand changes with income.
6
Q
How does price elasticity help a business make choices?
A
Helps a manufacturer decide whether to raise or lower prices of a product.
7
Q
How does income elasticity help a business make choices
A
Helps a manufacturer see what will happen to sales if the economy grows or shrinks.
