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Economics Chapter 5 Quiz

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Questions and Answers

What measures buyers' responsiveness to price changes?

Price Elasticity of Supply
Income Elasticity of Demand
Cross Elasticity of Demand
Price Elasticity of Demand (correct)

Which term describes demand that is very sensitive to price changes?

Inelastic Demand
Perfectly Inelastic Demand
Elastic Demand (correct)
Unitary Demand

What type of goods experiences an increase in purchases when income rises?

Luxury Goods
Complementary Goods
Normal Goods (correct)
Inferior Goods

What is the formula used to calculate price elasticity of demand?

<p>$Ed = rac{(Q2-Q1)/((Q2+Q1)/2)}{(P2-P1)/((P2+P1)/2)}$ (D)</p> Signup and view all the answers

Which factor tends to make demand for a good more elastic?

<p>Availability of substitutes (D)</p> Signup and view all the answers

Flashcards

Price Elasticity of Demand

How responsive buyers are to price changes.

Elastic Demand

Large change in quantity demanded in response to a price change.

Inelastic Demand

Small change in quantity demanded in response to price change.

Income Elasticity of Demand

How responsive buyers are to income changes.

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Normal Good

Demand increases with income, and decreases with lower income.