Chapter 4 Elasticity

Question 1

Price elasticity is…

Answer 1

is the percent change in quantity demanded per unit of percentage change in price along the demand curve

Question 2

e=0

Answer 2

Quantity demanded is constant

Question 3

e less than 1

Answer 3

inelastic meaning Q is less than price

Question 3

e = 1

Answer 3

unit elastic mean quantity is equal to price

Question 4

e greater than 1

Answer 4

elastic means quantity is greater than price

Question 5

e = infinity

Answer 5

perefect elastic, only buy at a given price

Question 6

Cross price elasticity is

Answer 6

demand of good A relative to good B

Question 7

If the cross elasticity is positive..

Answer 7

it is a substitute

Question 8

If the cross elasticity is negative…

Answer 8

it is a complements

Question 9

When it concerns revenue and elasticity, if the demand is elastic than the revenue…

Answer 9

decreases(more than 1%)

Question 10

When it concerns revenue and elasticity, if the demand is inelastic than the revenue…

Answer 10

increases(less than 1%)

Question 11

When it concerns revenue and elasticity, if the demand is unit elastic than the revenue…

Answer 11

remains the same(equal to 1%)