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Questions and Answers
What does the phrase 'more elastic' mean in the context of price elasticity?
What does the phrase '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 a positive value, ignoring the sign
- A good's elasticity has a smaller magnitude, ignoring the sign
- A good's elasticity has a positive value
What does a price elasticity of -2 indicate?
What does a price elasticity of -2 indicate?
- A one percent price rise leads to a one percent decline in quantity demanded
- A two percent price rise leads to a two percent decline 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)
When is the price elasticity of demand negative?
When is the price elasticity of demand negative?
- Only for luxury goods
- Only for essential goods
- For all goods
- Except in special cases (correct)
What does the income elasticity of demand measure?
What does the income elasticity of demand measure?
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What do Veblen and Giffen goods represent?
What do Veblen and Giffen goods represent?
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