Elasticity

Question 1

price elasticity of demand

Answer 1

% change in the qty demanded/% change in the price

Question 2

quantity demanded responds a lot to change in price

Answer 2

elastic

Question 3

quantity demanded responds a little to change in price

Answer 3

inelastic

Question 4

price elasticity of demand determinants

Answer 4

substitutability, proportion of income, time horizon, definition of market, luxury vs necessity, habit forming

Question 5

more substitutes

Answer 5

elastic

Question 6

less substitutes

Answer 6

inelastic

Question 7

big percent of income

Answer 7

elastic

Question 8

small percent of income

Answer 8

inelastic

Question 9

more time

Answer 9

elastic

Question 10

little time

Answer 10

inelastic

Question 11

narrowly defined market

Answer 11

elastic

Question 12

broadly defined market

Answer 12

inelastic

Question 13

luxuries

Answer 13

elastic

Question 14

necessities

Answer 14

inelastic

Question 15

habit formed goods

Answer 15

inelastic

Question 16

what do you need to do a total revenue test

Answer 16

2 prices and 2 quantities of a product

Question 17

income elasticity of demand (normal/ inferior)

Answer 17

% change in qty demanded/ % change in income

Question 18

cross price elasticity of demand (substitute/ complement)

Answer 18

% change in quantity demanded of good 1/ % change in price of good 2

Question 19

if price and TR go in the same direction it is

Answer 19

inelastic

Question 20

if price and TR go in opposite directions it is

Answer 20

elastiic

Question 21

if price moves but TR is unchanged it is

Answer 21

unit elastic

Question 22

if a market has perfect inelasticity, the value is

Answer 22

0

Question 23

if a market is relatively inelastic, the value is

Answer 23

0.01-0.99

Question 24

if a market is unit elastic, the value is

Answer 24

1

Question 25

if a market is relatively elastic, the value is

Answer 25

> 1

Question 26

if a market is perfectly elastic, the value is

Answer 26

infinity

Question 27

perfectly inelastic graphs are

Answer 27

vertical

Question 28

perfectly elastic graphs are

Answer 28

horizontal

Question 29

unit elastic graphs are

Answer 29

at a 45 degree angle

Question 30

governments like to tax

Answer 30

inelastic goods

Question 31

the top of the curve (high price, low quantity) is more

Answer 31

elastic

Question 32

the bottom of the curve (low price, high quantity) is more

Answer 32

inelastic

Question 33

if the result of the income elasticity of demand formula is positive it’s a(n)

Answer 33

normal good

Question 34

if the result of the income elasticity of supply formula is negative it’s a(n)

Answer 34

inferior good

Question 35

if the result of the cross price elasticity of demand formula is positive it’s a(n)

Answer 35

substitute

Question 36

if the result of the cross price elasticity of demand formula is negative it’s a(n)

Answer 36

complement