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Marknaden - priser, konsumenter och företag > modul 7 > Flashcards

modul 7 Flashcards

1
Q

What is the price elasticity of demand?

A

The percentage change in quantity demanded divided by the percentage change in price

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2
Q

What are the determinants of price elasticity of demand?

A

The determinants of price elasticity of demand are the availability of substitutes, the necessity of the good, the proportion of income spent on the good, and the time period considered.

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3
Q

Insulin is an example of a good that has __ demand

A

perfectly inelastic

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4
Q

What is cross price elasticity of demand and what is its formula?

A

Cross price elasticity of demand measures the responsiveness of demand for one good to changes in the price of another good. The formula for cross price elasticity of demand is (% change in quantity demanded of good A / % change in price of good B).

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5
Q

What does a positive income elasticity of demand indicate?

A

An increase in income increases demand

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6
Q

A horizontal supply curve is perfectly ______; its price elasticity of supply is infinite.

A

elastic

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7
Q

What does price inelastic supply mean?

A

Quantity supplied is not responsive to price changes

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8
Q

What is a vertical supply curve called?

A

Perfectly inelastic supply curve

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9
Q

What is the relationship between cross price elasticity of demand and the responsiveness of demand to changes in the price of another good or service?

A

Positive relationship

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10
Q

What is income elasticity of demand?

A

The response of quantity demanded to changes in income

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11
Q

The relationship between total revenue and price elasticity of demand is that when demand is price elastic, a decrease in price will ______ total revenue.

A

increase

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12
Q

How does the arc elasticity formula differ from the standard method of computing percentage change?

A

It measures the percentage change in a variable relative to the average value

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13
Q

What does the arc elasticity method allow us to do?

A

Compute elasticity at the midpoint over a range of change

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14
Q

What is the price elasticity of demand?

A

The percentage change in quantity demanded divided by the percentage change in price

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15
Q

What is the formula for calculating price elasticity of demand using the arc elasticity method?

A

Percentage change in quantity demanded divided by percentage change in price

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16
Q

The price elasticity of demand is __ when a change in price leads to an equal percentage change in quantity demanded.

A

unit price elastic

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17
Q

How is the price elasticity of demand calculated?

A

The price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price.

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18
Q

What is the formula for calculating price elasticity of demand?

A

Percentage change in quantity demanded divided by percentage change in price

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19
Q

How is the price elasticity of demand computed using the arc elasticity method?

A

The price elasticity of demand using the arc elasticity method is computed by dividing the percentage change in quantity demanded by the percentage change in price.

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20
Q

The concept of arc elasticity cannot be applied to ______ changes.

A

large

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21
Q

What does it mean when demand is price inelastic?

A

Quantity demanded is not responsive to a change in price

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22
Q

What are the determinants of price elasticity of demand?

A

The determinants of price elasticity of demand are the availability of substitutes, the necessity of the good, the proportion of income spent on the good, and the time period considered.

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23
Q

The determinants of price elasticity of demand include the availability of _ substitutes and the necessity of the good.

A

close

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24
Q

What is the relationship between total revenue and price elasticity of demand?

A

Total revenue is inversely related to price elasticity of demand

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25
Q

How does the value of price elasticity of demand change along a linear demand curve?

A

The value of price elasticity of demand changes along a linear demand curve because the slope of the curve varies. It is more elastic at higher prices and less elastic at lower prices.

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26
Q

What is the difference between elasticity and slope?

A

Elasticity measures the responsiveness of quantity demanded to changes in price, while slope measures the change in quantity demanded for a one-unit change in price.

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27
Q

What does it mean for demand to be price inelastic?

A

Demand is not affected by changes in price

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28
Q

What is the difference between perfectly inelastic demand and price inelastic demand?

A

Perfectly inelastic demand means that the change in quantity is zero for any percentage change in price, while price inelastic demand means only that the percentage change in quantity is less than the percentage change in price

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29
Q

If price and quantity demanded change by the same percentage, then total revenue __.

A

stays the same

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30
Q

What is the relationship between price changes and total revenue?

A

Price changes can either increase or decrease total revenue

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31
Q

How does a change in price affect total revenue?

A

The relationship between price changes and total revenue depends on the price elasticity of demand.

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32
Q

Can you provide an example of price elasticity of demand?

A

One example of price elasticity of demand is when the price of a luxury item increases and the quantity demanded decreases significantly.

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33
Q

Insulin is an example of a good that has __ demand

A

perfectly inelastic

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34
Q

Give an example of price elasticity of demand.

A

An example of price elasticity of demand is when a reduction in price leads to an increase in quantity demanded and total revenue.

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35
Q

How does a price change affect total revenue?

A

It depends on the initial price and the elasticity of demand

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36
Q

What is the concept of total revenue?

A

The relationship between price changes and total revenue

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37
Q

How does price changes affect total revenue?

A

The relationship between price changes and total revenue depends on the price elasticity of demand. If demand is elastic, a decrease in price will increase total revenue, while an increase in price will decrease total revenue. If demand is inelastic, a decrease in price will decrease total revenue, while an increase in price will increase total revenue. If demand is unit elastic, a change in price will not affect total revenue.

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38
Q

When the price of a good or service changes, the quantity demanded changes in the __ direction.

A

opposite

39
Q

What is total revenue?

A

The price per unit times the number of units sold

40
Q

What determines the price elasticity of demand?

A

The availability of substitutes
The amount of time buyers have to adjust to price changes
The importance of the good in household budgets

41
Q

What determines whether demand is more or less price elastic?

A

The availability of substitutes
Time
The importance of the item in household budgets

42
Q

Can you give an example of price elasticity of demand?

A

One example of price elasticity of demand is when the price of a luxury car increases and the quantity demanded decreases significantly. Another example is when the price of a generic brand of cereal decreases and the quantity demanded increases significantly.

43
Q

What is the concept of price elasticity of demand?

A

The relationship between availability of substitutes and price elasticity of demand

44
Q

What does a negative cross price elasticity of demand indicate?

A

Complements

45
Q

How are goods classified as substitutes or complements based on their cross price elasticity of demand?

A

By their cross price elasticity of demand

46
Q

What is cross price elasticity of demand and what is its formula?

A

Cross price elasticity of demand measures the responsiveness of demand for one good to changes in the price of another good. The formula for cross price elasticity of demand is (% change in quantity demanded of good A / % change in price of good B).

47
Q

What does a positive income elasticity of demand indicate?

A

An increase in income increases demand

48
Q

What does the income elasticity of demand measure?

A

Responsiveness of demand to changes in income

49
Q

What is the formula for income elasticity of demand?

A

Percentage change in quantity demanded divided by percentage change in income

50
Q

Cross price elasticity of demand measures the ______ of demand for a good or service to changes in the price of another good or service.

A

responsiveness

51
Q

How do you calculate cross price elasticity of demand?

A

To calculate cross price elasticity of demand, divide the percentage change in quantity demanded of one good by the percentage change in price of another good.

52
Q

The calculation of cross price elasticity of demand involves the percentage change in the quantity demanded of one good or service divided by the percentage change in ______

A

the price of a related good or service

53
Q

How is the income elasticity of demand calculated?

A

By dividing the percentage change in quantity demanded by the percentage change in income

54
Q

Normal goods have an income elasticity of demand ______ 0.

A

greater

55
Q

How is income elasticity of demand calculated?

A

Percentage change in quantity demanded divided by percentage change in income

56
Q

Which of the following goods is classified as normal based on its income elasticity of demand?

A

Luxury car

57
Q

The calculation of income elasticity of demand involves ______

A

the change in the quantity demanded at a specific price

58
Q

Give an example of a good with a negative income elasticity of demand.

A

Used clothing, beans, and urban public transit are examples of goods with a negative income elasticity of demand.

59
Q

What is the formula for calculating income elasticity of demand?

A

(Change in Quantity Demanded)/(Change in Income)

60
Q

How do you classify goods as substitutes or complements based on their cross price elasticity of demand?

A

Goods with positive cross price elasticity of demand are considered substitutes, while goods with negative cross price elasticity of demand are considered complements.

61
Q

How do you calculate income elasticity of demand?

A

To calculate income elasticity of demand, divide the percentage change in quantity demanded by the percentage change in income.

62
Q

What is the formula for cross price elasticity of demand?

A

Percentage change in quantity demanded of one good divided by percentage change in price of another good

63
Q

What is the formula for calculating cross price elasticity of demand?

A

(Change in Quantity Demanded of Good A)/(Change in Price of Good B)

64
Q

What are goods or services called if their income elasticity of demand is negative?

A

Inferior goods

65
Q

What does the cross price elasticity of demand measure?

A

Responsiveness of demand to changes in another good’s price

66
Q

Which of the following goods is classified as a substitute based on its cross price elasticity of demand?

A

Coffee and tea

67
Q

What is the relationship between cross price elasticity of demand and the responsiveness of demand to changes in the price of another good or service?

A

Positive relationship

68
Q

Based on their income elasticity of demand, how are goods classified as normal or inferior?

A

By their income elasticity of demand

69
Q

The _ elasticity of demand reflects the responsiveness of demand to changes in income.

A

income

70
Q

What is income elasticity of demand?

A

The response of quantity demanded to changes in income

71
Q

What does a negative income elasticity of demand indicate?

A

An increase in income reduces demand

72
Q

A horizontal supply curve is perfectly ______; its price elasticity of supply is infinite.

A

elastic

73
Q

______ is the concept that measures the responsiveness of supply to changes in price.

A

Elasticity of supply

74
Q

How is the elasticity of supply calculated?

A

The elasticity of supply is calculated by dividing the percentage change in quantity supplied by the percentage change in price.

75
Q

How is elasticity of supply calculated?

A

By dividing the percentage change in quantity supplied by the percentage change in price

76
Q

The larger the price elasticity of supply, the more ______ the firms that supply the good or service are to a price change.

A

responsive

77
Q

What does price inelastic supply mean?

A

Quantity supplied is not responsive to price changes

78
Q

What does it mean for supply to be unit price elastic?

A

Unit price elastic supply means that the percentage change in quantity supplied is equal to the percentage change in price.

79
Q

What does price elastic supply mean?

A

Price elastic supply means that quantity supplied is more responsive to price changes.

80
Q

What does it mean if the price elasticity of supply is infinite?

A

Perfectly price elastic supply

81
Q

What does unit price elastic supply mean?

A

Unit price elastic supply means that the percentage change in quantity supplied is equal to the percentage change in price.

82
Q

The calculation of elasticity of supply is determined by dividing the percentage change in ______ by the percentage change in quantity supplied.

A

price

83
Q

What is a vertical supply curve called?

A

Perfectly inelastic supply curve

84
Q

What does it mean if the price elasticity of supply is less than 1?

A

Price inelastic supply

85
Q

How is the price elasticity of supply calculated?

A

Percentage change in quantity supplied divided by percentage change in price

86
Q

What does it mean for supply to be price inelastic?

A

A small change in price leads to a relatively large change in quantity supplied

87
Q

What does perfectly price elastic supply mean?

A

Quantity supplied is perfectly responsive to price changes

88
Q

The more responsive the supply of apartments is to changes in price (rent in this case), the less rents rise when the demand for apartments ______.

A

increases

89
Q

What is the concept of elasticity of supply?

A

The responsiveness of supply to price changes

90
Q

What does the price elasticity of supply measure?

A

The responsiveness of quantity supplied to a change in price

91
Q

Why is time an important determinant of price elasticity of supply?

A

Because supply is more elastic in the long run than in the short run

92
Q

Why is the price elasticity of supply greater when the length of time under consideration is longer?

A

Producers have more options for adjusting to the change in price

93
Q

What does it mean for supply to be price elastic?

A

Price elastic supply means that the quantity supplied is highly responsive to changes in price.

Marknaden - priser, konsumenter och företag (14 decks)

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