Elasticity

Question 1

Measures the responsiveness of one variable to changes in another variable

Answer 1

Elasticity

Question 2

A measure of the responsiveness of the quantity demanded of a good to a change in the pricr of that good

Answer 2

Own price elasticity

Question 3

Give the formula for Own price elasticity

Answer 3

Change in demand / Change in price

Question 4

When is demand said to be elastic?

Answer 4

When the absolute value of Own price elasticity is greater than 1

E(Qx)(Px) > 1

Question 5

When is demand said to be inelastic?

Answer 5

If the absolute value of the own price elasticity is less than 1

E(Qx)(Px) < 1

Question 6

When is demand said to be unitary elastic?

Answer 6

If the absolute value of the own price elasticity is equal to 1

E(Qx)(Px)=1

Question 7

These are goods deemed necessary with very few substitutes

Answer 7

Inelastic goods

Question 8

These are goods deemed not to necessary, having numerous substituted

Answer 8

Elastic goods

Question 9

If the demand is elastic, the increase of price will lead to?

Answer 9

Decrease in total revenue

Question 10

If the demand is elastic, the decrease in price will lead to?

Answer 10

Increase in total revenue

Question 11

If demand is inelastic,an increase in

Question 12

Formula for total revenue test

Answer 12

Quantity x Price