price, income and cross elasticities of demand Flashcards
understanding of all mentioned know how to use formulas
1
Q
what does price elasticity of demand measure
A
measures how much quantity demanded will respond to a change in price.
2
Q
when ped is between -1 and - ∞ what can we say
A
it means ped/ demand for the good is elastic
3
Q
when a product is elastic what does that mean
A
it means consumers are very responsive to changes in price so quantity demanded changes by a bigger percentage
4
Q
whenever a ped is between -1 and 0
A
it means ped/ demad for the good is inelastic
5
Q
when a product is inelastic what does that mean
A
when there’s a percentage change in price, consumers are unreponsive to the change. they react only a little so quantity demanded decreseas by a small percentage.
