Elasticity

Question 1

Price Elasticity of demand (def, formula)

Answer 1

The responsiveness of change in demand for a good after a change in price.

(change in demand/change in price)*100

Question 2

Price inelastic in demand

Answer 2

When consumers have a less than proportional change in demand after a change in price

Question 3

Price elastic in demand

Answer 3

When consumers have a more than proportional change in demand after a change in price

Question 4

0 < PeD < -1

Answer 4

Price inelastic good

Question 5

PeD > -1

Answer 5

Price elastic good

Question 6

Income Elasticity of Demand (YeD)

Answer 6

The responsiveness of a change in demand followed by a change in consumer incomes

Question 7

YeD < 0

Answer 7

Inferior good

Question 8

0 < YeD < 1

Answer 8

Normal good

Question 9

YeD > 1

Answer 9

Luxury good

Question 10

Inferior goods

Answer 10

A good that suffers a fall in demand as incomes rise

Question 11

Normal goods

Answer 11

A good with increased demand as incomes rise

Question 12

Luxury goods

Answer 12

A good with a more than proportional increase in demand after a change in consumer incomes