BS ENTRP-1202 (Elasticity and Its Application)

It is a measure of how much buyers and sellers respond to changes in market conditions

• Elasticity

• Economics

• Business

• Supply

It is a measure of how much the quantity demanded of a good responds to a change in the price of that good.

• Price Elasticity of Supply

• Price Elasticity of Demand

• Price Elasticity of Income

• Price Elasticity of Revenue

How can a demand become more elastic?

• the good is a luxury

• larger the number of close substitutes

• the more narrowly defined the market

• the shorter the time period

What is the formula in finding PED?

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

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

• quantity demanded divided by the change in price

• percentage change in the quantity demanded multiplied by the percentage change in price

Quantity demanded does not respond strongly to price changes.

• Unit Elastic

• Elastic Demand

• Inelastic Demand

• all of the above

Price elasticity of demand is greater than one.

• Unit Elastic

• Inelastic Demand

• Elastic Demand

• None of the above

If the computed PED is 5, demand is

• unit elastic

• inelastic

• equilibrium

• elastic

Quantity demanded changes by the same percentage as the price.

• Inelastic

• Elastic

• Unit elastic

• Equilibrium

If elasticity equal zero, demand is

• Perfectly Unit Elastic

• Perfectly Inelastic

• Perfectly Equilibrium

• Perfectly Elastic

Perfectly elastic demand means elasticity equals

• greater than 1

• less than 1

• zero

• infinity