Quiz 5

In Economics,_______________ is the ratio of the percent change in one variable to the percentage change in another variable.

Price elasticity of demand is the responsiveness of the quantity demanded of a particular product to a change in its price.

______________ elasticity of demand is the responsiveness of the quantity demanded of a particular product to a change in consumers’ income.

The responsiveness of the quantity supplied of a particular product to a change in its price is called ________________.

Cross price elasticity is the responsiveness of the quantity demanded/supplied of a particular product to a change in the price of a substitute product.

If a good is price elastic:

A good or a service is price elastic if:

Demand for a good or a service will be price elastic if more substitutes are available in the market.

Necessities are usually more price elastic compared to luxurious goods.

Demand tends to be more elastic in the long run rather than in the short run.

Price elasticity of ___________ is the responsiveness of the quantity supplied of a good to a change in its price.

In the _____________, supply tends to be elastic since the firms can invest in capital and grow in size in the long run.