Lesson 21 pg. 64 - 65 Flashcards
1
Q
As supply and demand of a good shift, what also shifts?
A
As the supply and demand of a good shift, the equilibrium price of that good also shifts.
2
Q
Describe how demand is elastic
A
In most cases, demand is elastic: if prices go up, people will buy less, but if prices go down, people will buy more.
>This phenomenon is known as the price elasticity of demand.
3
Q
What is the major reason why demand for most goods is elastic?
A
The availability of substitutes is a major reason why the demand for most goods is elastic.
4
Q
Describe an inelastic demand
A
If consumers will pay very high prices for a particular commodity because they feel there are no substitutes, we say that the demand for that good is inelastic.
