Ch. 5
The price elasticity of supply measures how responsive
sellers are to a change in price
Elasticity is
a measure of how much buyers and sellers respond to changes in market conditions.
If demand is price inelastic, then
buyers do not respond much to a change in price
Demand is said to be price elastic if
buyers respond substantially to changes in the price of the good.
The price elasticity of demand measures
buyers' responsiveness to a change in the price of a good
If the quantity demanded of a certain good responds only slightly to a change in the price of the good, then the
demand for the good is said to be inelastic.
Demand is said to be unit elastic if quantity demanded
does not respond to a change in price
When quantity demanded responds strongly to changes in price, demand is said to be
elastic
Demand is said to have unit elasticity if the price elasticity of demand is
equal to 1
Demand is elastic if the price elasticity of demand is
greater than 1
In general, elasticity is a measure of
how much buyers and sellers respond to changes in market conditions
Demand is inelastic if the price elasticity of demand is
less than 1
The price elasticity of demand measures the
magnitude of the response in quantity demanded to a change in price
Economists compute the price elasticity of demand as the
percentage change in quantity demanded divided by the percentage change in price.
Which of the following expressions represents a cross-price elasticity of demand?
percentage change in quantity demanded of bread divided by percentage change in price of butter
The price elasticity of demand measures how much
quantity demanded responds to a change in price
Demand is said to be inelastic if
the quantity demanded changes only slightly when the price of the good changes.
Cross-price elasticity of demand measures how
the quantity demanded of one good changes in response to a change in the price of another good.
The price elasticity of supply measures how much
the quantity supplied responds to changes in the price of the good