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Questions and Answers
What does a price elasticity of -2 indicate?
What does a price elasticity of -2 indicate?
- A two percent price rise leads to a one percent increase in quantity demanded
- A one percent price rise leads to a two percent increase in quantity demanded
- A two percent price rise leads to a one percent decline in quantity demanded
- A one percent price rise leads to a two percent decline in quantity demanded (correct)
What does the term 'more elastic' mean in the context of price elasticity?
What does the term 'more elastic' mean in the context of price elasticity?
- A good's elasticity has greater magnitude, ignoring the sign (correct)
- A good's elasticity has greater magnitude, considering the sign
- A good's elasticity has a lesser magnitude, considering the sign
- A good's elasticity has a lesser magnitude, ignoring the sign
Under what circumstances are price elasticities positive?
Under what circumstances are price elasticities positive?
- For luxury goods
- For normal goods
- For Veblen and Giffen goods (correct)
- For inferior goods
What does the income elasticity of demand measure?
What does the income elasticity of demand measure?
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What does the price elasticity of demand measure?
What does the price elasticity of demand measure?
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