10 Questions
At which point on the demand curve does elasticity become infinity?
Point t
What is the significance of the midpoint method in calculating price elasticity?
It avoids confusion between initial and final price and quantity figures.
What happens to elasticity as you move from point T towards point t on the demand curve?
Elasticity increases
When might arc-elasticity be required to be calculated?
When elasticity needs to be measured over a range of prices
How is elasticity calculated using the midpoint method?
By taking the averages of the initial and final price and quantity figures
What does a point elasticity of zero indicate?
Perfectly inelastic demand
Why is it important to calculate elasticity over an arc of the demand curve?
When price and quantity changes are large
What happens to elasticity at the midpoint of the demand curve?
Elasticity is one
What does a negative elasticity value indicate?
Inelastic demand
What does a point elasticity greater than one signify?
Perfectly elastic demand
Explore the relationship between disposable income and quantity demanded for normal goods. Learn how normal goods are affected by changes in consumer income, and which goods fall under this category.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
