Elasticity

Question 1

Complimentary good

Answer 1

when two goods are typically purchased/consumed together and is represented by a negative XED

Question 2

Elastic demand

Answer 2

When the change in price brings a more than proportionate change in quantity demanded. Elastic = above 1

Question 3

Inelastic demand

Answer 3

Change in price brings a less than proportionate change in quantity demanded and is represented by a number between 0-1

Question 4

Inferior Good

Answer 4

a good for which demand rises when income falls as it is the inexpensive option and is represented by a negative YED

Question 5

Normal good

Answer 5

A good who’s demand rises as income rises and is represented by a positive YED

Question 6

Price elasticity of demand

Answer 6

Measures the responsiveness of quantity demanded following a change in price

Question 7

Price elasticity of supply

Answer 7

measures the responsiveness of quantity supplied following a change in price

Question 8

Cross elasticity of demand (XED)

Answer 8

Measures the responsiveness of quantity demanded of good b in response to the change in price of good A

Question 9

Income elasticity of demand (YED)

Answer 9

Measures the responsiveness of quantity demanded after a change in income