Elasticity

Question 1

What is elasticity of demand?

Answer 1

Elasticity of demand is how much a consumer will purchase at any given price.

Question 2

What is Elasticity of supply?

Answer 2

Price elasticity of supply measures the responsiveness to the supply of a good or service after a change in its market price.

Question 3

Elastic

Answer 3

People will not buy as much when the prices increase.

Question 4

Inelastic

Answer 4

Even if the price is really high people still buy it. E.g. smokes.

This is because of the determinant’s
Addictive, durability, lack of substitutes, income and essentials.

Question 5

Revenue equals

Answer 5

Price times quantity

Question 6

What are the determinants of elasticity?

Answer 6

S- substitutes 
P- proportion of income
L- luxury or necessity?
A- Addictive?
T- Time
& D- Durability of the product
    C- Compliments to an expensive  product.

Question 7

What are the determinant of price elasticity?

Answer 7

• Ability to hold stock
• Availability of resources
• Availability of excess capacity
• The length of the production period.

Question 8

What is an example of something that is inelastic?

Answer 8

Petrol and water

Question 9

What is an example of something that is elastic?

Answer 9

Chocolate and potato chips

Question 10

Price ⬆️ Revenue ⬇️ =

Answer 10

Elastic

Question 11

Price ⬇️ Revenue ⬆️ =

Answer 11

Elastic

Question 12

Price ⬆️ Revenue ⬆️=

Answer 12

Inelastic

Question 13

Price ⬇️ Revenue ⬇️=

Answer 13

Inelastic

Question 14

When the %P > %Q Demand is said to be?

Answer 14

Relatively inelastic

Question 15

When the %P < %Q Demand is said to be?

Answer 15

Relatively elastic

Question 16

When the %P > %QS Supply is said to be?

Answer 16

Relatively inelastic

Question 17

When the %P < %Q Supply is said to be?

Answer 17

Relatively elastic