CHAPTER 9 PRICE ELASTICITY OF DEMAND

Question 1

Elastic demand

Answer 1

Where the price elasticity of demand is greater than 1. The responsiveness od demand is proportionally greater than a change in price. Demand is perfectly elastic if price elasticity of demand is infinity.

Question 2

Inelastic demand

Answer 2

Where the price elasticity of demand is less than 1. The responsiveness of demand is proportionally less than the change in price. Demand is perfectly inelastic if price elasticity of demand is zero.

Question 3

Price elasticity of demand or own price elasticity of demand

Answer 3

The proportionate response of changes in quantity demanded to a proportionate change in price, measured by a formula.

Question 4

Unitary elasticity

Answer 4

Where the price elasticity of demand is 1. The responsiveness of demand is proportionally equal than the change in price.

Question 5

Total expenditure

Answer 5

Quantity bought times the average price of a product.

Question 6

Total revenue

Answer 6

Quantity solved times the average price of a product.