Elasticity

PED NUMBER is greater than 1 so......

• PED is elastic

• PED is inelastic

• PED is perfectly inelastic

• PED is unitary

Which of the following is NOT a determinant of PED?

• % of income

• availability of substitutes

• necessity

• ease of producing the good

If the product is PED elastic a firm should do what to raise total revenue?

• Lower price

• Raise price

• Do not change price

• increase supply

An inferior elastic good is most likely to have which of the following YED values?

• +3

• +0.5

• -5

• -0.2

Bread is most likely to have which of the following YED values......

• +0.2

• +5

• -5

• -0.8

Weak substitutes are most likely to have which of the following XED values.....

• +6

• +0.2

• -3

• -0.2

Tennis balls and tennis racquets are most likely to have which of the following XED values.....

• +3

• -4

• -0.5

• +0.7

Which of the following reasons explains why PES is always positive....

• Profit incentive

• DMU

• Sub effect

• Income effect

Which of the following is not a determinant of PES.....

• Ease of transporting good

• Time to produce

• Availability of stocks

• % of income good takes up

PES values of +1.5 means....

• QS is unresponsive to a change in price

• QS is responsive to a change in price

• good is inelastic in supply

• good is elastic in demand