3rd Week

Question 1

Formular PED

Answer 1

((Q2-Q1)/Q1)/((P2-P1)/P1)
Q´(p)*p/Q(p)

Question 2

-1 < PED < 0

Answer 2

Inelastic demand. In percentage, when the price changes the quantity changes in a lower proportion, but in the opposite direction.

Question 3

-∞ < PED < -1

Answer 3

Elastic demand. In percentage, when the price changes the quantity changes in a higher proportion, but in the opposite direction.

Question 4

Formular INCOME DEMAND ELASTICITY

Answer 4

((Qd2-Qd1)/Qd1)/((I2-I1)/I1)
Q´(r)*r/Q(r)

Question 5

Cross price elasticity

Answer 5

Same as PED but quantity demanded of good X changes when
there is a change in the price of a good Y.