Chapter 4

Question 1

a measure of the responsiveness of an economic actor to changes in market factors, including price and income

Answer 1

elasticity

Question 2

the responsiveness of the quantity demanded to a change in price

Answer 2

price elasticity of demand

Question 3

a relationship between price and quantity demanded characterized by relatively weak responses of buyers to price changes

Answer 3

price-inelastic demand

Question 4

a relationship between price and quantity demanded characterized by relatively strong responses of buyers to price changes

Answer 4

price-elastic demand

Question 5

the percentage change in the quantity demanded is smaller than the percentage change in price. The elasticity value is less than 1 in absolute value

Answer 5

price-inelastic demand (technical definition)

Question 6

the percentage change in the quantity demanded is larger than the percentage change in price. The elasticity value is more than 1 in absolute value

Answer 6

price-elastic demand (technical definition)

Question 7

the quantity demanded does not change at all when price changes. The elasticity value is 0 perfectly inelastic demand

Answer 7

perfectly inelastic demand

Question 8

any change in price leads to an infinite change in quantity demanded. The elasticity value is infinity

Answer 8

perfectly elastic demand

Question 9

the percentage change in the quantity demanded is exactly equal to the percentage change in price. The elasticity value is −1

Answer 9

unit-elastic demand

Question 10

a measure of the responsiveness of quantity supplied to changes in price

Answer 10

price elasticity of supply

Question 11

a measure of the responsiveness of demand to changes in income, holding price constant

Answer 11

income elasticity of demand

Question 12

goods for which demand increases when incomes rise and decreases when incomes fall

Answer 12

normal goods

Question 13

goods for which demand decreases when incomes rise and increases when incomes fall

Answer 13

inferior goods

Question 14

the tendency of a price increase for a particular good to reduce the quantity demanded of that good, as buyers turn to relatively cheaper substitutes

Answer 14

substitution effect of a price change

Question 15

the tendency of a price increase to reduce the quantity demanded of normal goods (and to increase the quantity demanded of any inferior goods)

Answer 15

income effect of a price change

Question 16

a measure of the relatively immediate responsiveness to a price change

Answer 16

short-run elasticity

Question 17

a measure of the response to a price change after economic actors have had time to make adjustments

Answer 17

long-run elasticity