Chapter 2: Elasticity

Question 0

What is price elasticity of demand?

Answer 0

Measure of responsiveness of a quantity demanded of a good to a change in its price, all other factors held constant

Question 1

What is elasticity?

Answer 1

Measure of responsiveness of a quantity demanded of a good (when there is a change)

Question 2

Price elasticity is represented as

Answer 2

Ep

Question 3

The value for price elasticity of demand is always

Answer 3

Negative

Because of the law of demand

Question 4

Factors affecting elasticity of demand are

Answer 4

Closeness of substitutes
Proportion of income spent of the good
Time to adjust to price changes

Question 5

What is cross elasticity of demand?

Answer 5

Measure of responsiveness of the demand for a good to change in the price of related good

Question 6

What is income elasticity of demand?

Answer 6

Measure of responsiveness of the demand for a good or service to change in income
Other things remaining constant