Elasticity of Demand and Supply

Question 1

What is Price Elasticity of Demand?

Answer 1

Price elasticity of demand measures how much the quantity demanded for a good changes when price changes

Question 2

What are the two main categories of PED?

Answer 2

Price elastic and inelastic

Question 3

What does Elastic Demand mean?

Answer 3

Change in price leads to a larger percentage change in demand.

Question 4

What does Inelastic Demand mean?

Answer 4

Change in price leads to a smaller percentage change in demand.

Question 5

What is the formula used to calculate PED?

Answer 5

Percentage change in quantity demanded divided by percentage change in price.

Question 6

What is price elasticity of supply?

Answer 6

A way to measure how much of the amount of a good or service that businesses are willing to sell changes when the price of that good or service changes.

Question 7

What does PES measure?

Answer 7

PES measures the percentage change in quantity supplied divided by a percentage change in price?

Question 8

What is the value if the price is elastic?

Answer 8

More than 1

Question 9

What is the value if the price is inelastic?

Answer 9

Less that 1

Question 10

What is the value if price is exactly 1

Answer 10

Exactly 1