Chapter 5

Question 1

Price Elasticity of Demand

Answer 1

How sensitive quantity demanded is to changes in the products own price

Question 2

Cross Elasticity of Demand

Answer 2

Degree to which a change in the price of another good affects the quantity demanded

Question 3

Income Elasticity of Demand

Answer 3

Degree to which changes in income affect the quantity demanded

Question 4

Perfectly Inelastic

Answer 4

Quantity demanded is unaffected by changes in the products price, price elasticity of demand = 0

Question 5

Inelastic

Answer 5

Quantity demanded is hardly affected by changes in the products price, price elasticity of demand < 1

Question 6

Unit Elastic

Answer 6

Price elasticity of demand = 1

Question 7

Elastic

Answer 7

Quantity is significantly affect by changes in the products price, price elasticity of demand > 1

Question 8

Perfectly Elastic

Answer 8

Quantity is infinitely affected by changes in the products price, price elasticity of demand = Infinity

Question 9

Price Elasticity of Supply

Answer 9

How sensitive quantity supplied is to changes in the products own price

Question 10

Tax Incidence

Answer 10

How the tax burden is shared by consumers and producers