learning sheet 3

Question 1

what is the price elasticity

Answer 1

the percentage change in the quantity demanded of a good or service divided by the percentage change in price

Question 2

what is price elastic demand

Answer 2

is the measurement of the change in the consumption of a product in relation to a change in its price

Question 3

how do we know if a good is perfectly elastic

Answer 3

if the price elasticity is infinite if demand changes substantially even with minimum price change. If the price elasticity is greater than 1. the good is elasticity if less than 1 it is inelastic

Question 4

what is inelastic demand

Answer 4

when a buyers demand for a product does not change as much as its change in price

Question 5

what is perfectly elastic demand

Answer 5

when the demand for the entirely dependent on the price of the product

Question 6

what is unit elastic demand

Answer 6

an economic theory that assumes a change in product price causes an equal and proportional change in the quantity demanded

Question 7

what are the 4 factors

Answer 7

avaliability of substitutes if the good is a luxury of a necessity, the proportion of the income spent on the good, how much time has elapsed since the time changed

Question 8

what is cross elasticity of demand

Answer 8

refers to the way in the price of one good can affect quantity demanded of another good

Question 9

what is a substitute good

Answer 9

are a product that can be as a replacement for another product because it serves the same purpose