Chapter 5

Question 1

Price elasticity

Answer 1

Measures how much quantity demanded responds toa change in price

Question 2

What is elasticity

Answer 2

Measures how strongly quantity demanded and supplied responds to price changes

Question 3

Elastic

Answer 3

Demand for a good is elastic if it responds greatly to price change(demand changes a lot of if there is a price increase or decrease)

Question 4

Inelastic

Answer 4

Quantity demanded hardly responds to price changes

Question 5

Is luxuries inelastic or elastic

Answer 5

Elastic because it is not a necessity so if price rises quantity demanded changes a lot

Question 6

What formula do you use to calculate price elasticity

Answer 6

Midpoint method (percent change in quantity/percent change in pirce)

Question 7

True or false if demand is greater than 1 it is elastic

Answer 7

True

Question 8

True or false if demand is less than 1 it is inelastic

Answer 8

True

Question 9

Does inferior goods (bus, public transportation etc) demand go up or down when income increases

Answer 9

whne income increases inferior goods demand goes down because inferior goods are usually purchased when someones income is lowered