Chapter 5

Question 1

elasticity

Answer 1

A general concept used to quantify the response in one variable when another variable changes.

Question 2

cross-price elasticity

Answer 2

How the price of one good affects the demand for another.

Question 3

price elasticity of demand

Answer 3

The ratio of the percentage of change in quantity demanded to the percentage of change in price; measures the responsiveness of quantity demanded to changes in price.

Question 4

perfectly inelastic demand

Answer 4

Demand in which quantity demanded does not respond at all to a change in price.

Question 5

perfectly elastic demand

Answer 5

Demand in which quantity drops to zero at the slightest increase in price.

Question 6

elastic demand

Answer 6

A demand relationship in which the percentage change in quantity demanded is larger than the percentage change in price in absolute value. (greater than 1)

Question 7

inelastic demand

Answer 7

Demand that responds somewhat to changes in price. (between 0 and 1).

Question 8

unitary elasticity

Answer 8

A demand relationship in which the percentage change in quantity of a product demanded is the same as the percentage change in price in absolute value (demand elasticity of 1)

Question 9

point elasticity

Answer 9

A measure of elasticity that uses the slope measurement.

Question 10

income elasticity of demand

Answer 10

A measure of the responsiveness of demand to changes in income.

Question 11

cross-price elasticity of demand

Answer 11

A measure of the response of the quantity of one good demanded to a change in the price of another good.

Question 12

elasticity of supply

Answer 12

A measure of the response of quantity of a good supplied to a change in price of that good. Likely to be positive in output markets.

Question 13

elasticity of labor supply

Answer 13

A measure of the response of labor supplied to a change in the price of labor.