(5) Elasticity and Its Application

Question 1

a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants

Answer 1

elasticity

Question 2

a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price

Answer 2

price elasticity of demand

Question 3

the mount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold

Answer 3

total revenue

Question 4

a measure of how much the quantity demanded of a good responds to a change in consumer’ income, computed as the percentage change in quantity demanded divided by the percentage change in income

Answer 4

income elasticity of demand

Question 5

a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good

Answer 5

cross-price elasticity of demand

Question 6

a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price

Answer 6

price elasticity of supply