Elasticity Flashcards
1
Q
when is a good price elastic?
A
- greater than 1
2
Q
when is a good price inelastic?
A
- less than 1
3
Q
what does it mean if a good’s price elasticity is 0?
A
- no amount of price change produces a change in demand
- perfectly inelastic
4
Q
what does it mean if a good’s price elasticity is exactly 1?
A
- price change leads to an equal percentage change in demand
- unitary elasticity
5
Q
what affects price elasticity?
A
- availability of substitutes
- urgency
6
Q
when is a good income elastic?
A
- greater than 1
- luxury
7
Q
when is a good income inelastic?
A
- between 0 and 1
- necessity
8
Q
what does it mean if a good has an income elasticity of demand below 0?
A
- inferior good
