Chap 5

Question 1

when a given percent price change in price leads to an equal percentage change in quantity demanded or supplied

Answer 1

constant unitary elasticity

Question 2

the percentage change in the quantity of good A that is demanded as a result of a percentage change in good B

Answer 2

cross-price elasticity of demand

Question 3

when the elasticity of demand is greater than one, indicating a high responsiveness of quantity demanded or supplied to changes in price

Answer 3

elastic demand

Question 4

when the elasticity of either supply is greater than one, indicating a high responsiveness of quantity demanded or supplied to changes in price

Answer 4

elastic supply

Question 5

an economics concept that measures responsiveness of one variable to changes in another variable

Answer 5

elasticity

Question 6

the percentage change in the quantity of savings divided by the percentage change in interest rates

Answer 6

elasticity of savings

Question 7

when the elasticity of demand is less than one, indicating that a 1 percent increase in price paid by the consumer leads to less than a 1 percent change in purchases; indicates a low responsiveness by consumers to price changes

Answer 7

inelastic demand

Question 8

when the elasticity of supply is less than one, indicating that a 1 percent increase in price paid to the firm will result in a less than one percent in production by the firm; this indicates a low responsiveness of the firm to price increases

Answer 8

inelastic supply

Question 9

the extremely elastic situation of demand or supply where quantity changes by an infinite amount in response to any change in price; horizontal in appearance

Answer 9

infinite elasticity; perfect elasticity

Question 10

the relationship between the percent change in price resulting in a corresponding percentage change in the quantity demanded or supplied

Answer 10

price elasticity

Question 11

percentage change in the quantity demanded of a good or service divided by the percentage change in price

Answer 11

price elasticity of demand

Question 12

percentage change in the quantity supplied divided by the percentage change in price

Answer 12

price elasticity of supply

Question 13

manner in which the tax burden is divided between buyers and sellers

Answer 13

tax incidence

Question 14

when the calculated elasticity is equal to one indicating that a change int he price of the good or service results in a proportional change in the quantity demanded or supplied

Answer 14

unitary elasticity

Question 15

the percentage change in hours worked divided by the percentage change in wages

Answer 15

wage elasticity of labor supply

Question 16

the highly inelastic case of demand or supply in which a percentage change in price, no matter how large, results in zero change in the quantity; vertical in appearance

Answer 16

zero inelasticity; perfect inelasticity