XED&YED (L15)

Question 1

Formula for cross price elasticity of demand (XED)

Answer 1

Percentage change in quantity demanded of product A/ percentage change in price of product B

Question 2

What does XED measure

Answer 2

Responsiveness of demand for one good to changes in price of another good

Question 3

Substitute goods

Answer 3

Positive XED

Question 4

Complement goods

Answer 4

Negative XED

Question 5

XED of unrelated goods

Answer 5

0

Question 6

Income elasticity of demand (YED) formula

Answer 6

Percentage change in quantity demanded/ percentage change in income

Question 7

What happens to the demand of a normal good when income increases

Answer 7

Demand increases

Question 8

What happens to the demand of an inferior good when income decreases

Answer 8

Demand increases

Question 9

Inferior goods have a ____ YED

Answer 9

Negative

Question 10

Normal goods have a _____ YED

Answer 10

Positive

Question 11

Interval of YED for an income inelastic normal good

Answer 11

0 and 1

Question 12

what are income inelastic normal goods classed as

Answer 12

Necessities

Question 13

Describe the income elasticity of a normal good with a YED larger than 1

Answer 13

Income elastic

Question 14

What type of good is an income elastic normal good

Answer 14

Luxury

Question 15

> (PED)

Answer 15

Inelastic

Question 16

Unitary elastic (PED)

Answer 16

1

Question 17

<1 (PED)

Answer 17

Elastic

Question 18

Infinity (PED)

Answer 18

Perfectly elastic

Question 19

PES (0)

Answer 19

Perfectly inelastic

Question 20

PES (less than 1)

Answer 20

Inelastic

Question 21

PES (1)

Answer 21

Unitary elastic

Question 22

PES (1- infinity)

Answer 22

Elastic

Question 23

PES (infinity)

Answer 23

Perfectly elastic