Elasticity of Demand

Question 1

Full form of PED

Answer 1

Price Elasticity of Demand

Question 2

Formula of PED

Answer 2

% change in quantity demanded ÷ % change in price

Question 3

When is PED elastic?

Answer 3

When PED > 1

Question 4

When is PED inelastic?

Answer 4

When PED < 1

Question 5

When is PED at unitary elasticity

Answer 5

When PED = 1

Question 6

Full form of YED

Answer 6

Income Elasticity of Demand

Question 7

Formula of YED

Answer 7

% change in quantity demanded ÷ % change in income

Question 8

Which goods have positive YED?

Answer 8

Normal goods

Question 9

Which goods have negative YED?

Answer 9

Inferior goods

Question 10

Full form of XED

Answer 10

Cross-price Elasticity of Demand

Question 11

What is XED?

Answer 11

When change in price of one good leads to change in quantity demanded of another

Question 12

Formula of XED

Answer 12

% change in quantity demanded of good A ÷ % change in price of good B

Question 13

When is XED positive?

Answer 13

When goods are substitutes

Question 14

When is XED negative?

Answer 14

When goods are complements

Question 15

What does it mean when XED is close to zero?

Answer 15

Goods are unrelated

Question 16

What does perfectly elastic demand look like on diagram?

Answer 16

Straight horizontal line

Question 17

What does perfectly inelastic demand look like on diagram?

Answer 17

Straight vertical line