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Questions and Answers
What are the main determinants of price elasticity of demand?
The main determinants of price elasticity of demand are the availability of substitutes, the necessity of the good, the proportion of income spent on the good, and the time period considered.
Explain the difference between elastic and inelastic demand using the concept of price elasticity.
Elastic demand means that quantity demanded is highly responsive to a change in price, while inelastic demand means that quantity demanded is not very responsive to a change in price.
Elasticity of demand measures what aspect of consumer behavior?
Elasticity of demand measures how responsive quantity demanded is to a change in price.
Study Notes
Price Elasticity of Demand
- The main determinants of price elasticity of demand are:
- The availability of substitutes
- The degree of necessity
- The proportion of income spent on the good
- The time period involved
Elastic vs Inelastic Demand
- Elastic demand occurs when a small change in price leads to a large change in quantity demanded
- Inelastic demand occurs when a large change in price leads to a small change in quantity demanded
Elasticity of Demand
- Elasticity of demand measures the responsiveness of the quantity demanded of a good to a change in its price or other influential factors
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Description
Test your knowledge of elasticity of demand with this quiz! Explore the concept of price elasticity, understand the main determinants of price elasticity of demand, and grasp the difference between elastic and inelastic demand. Perfect for economics students and anyone interested in consumer behavior.
