ped & yed - theme 1.2 (book2)

Question 1

elasticity measures the ______ of ____ to a change in _____ or_______.

Answer 1

elasticity measures the responsiveness of demand to a change in price or income.

Question 2

PED measures the change in ______ relative to a change in ____.

Answer 2

PED measures the change in demand relative to a change in price.

Question 3

PED equation?

Answer 3

% change in quantity demanded
—————————————–
% change in price

Question 4

it is assumed that PED is always ________

Answer 4

negative

Question 5

PED between 0 to 1 is……..

Answer 5

price inelastic

Question 6

PED greater than 1 is……..

Answer 6

price elastic

Question 7

price elastic means that a change in _____ will lead to a _____ change in _____.

Answer 7

price elastic means that a change in price will lead to a greater change in demand.
(demand is sensitive to a change in price)

Question 8

price inelastic means that a change in ____ will lead to a _____ change in ______.

Answer 8

price inelastic means that a change in price will lead to a lower change in demand.
(demand is not very sensitive to a change in price)

Question 9

factors that influence PED?

Answer 9

brand strength, competition, type of good, availability of substitutes, time

Question 10

YED is the extent to which _______ is affected relative to a change in ______

Answer 10

YED is the extent to which demand is affected relative to a change in income.

Question 11

YED equation?

Answer 11

      % change in income

Question 12

luxury goods have YED _____ than……

Answer 12

luxury goods have YED more than 1

Question 13

as _____ grows, proportionally _____ is spent on luxuries.

Answer 13

as income grows, proportionally more is spent on luxuries. (opposite for necessities)