11 - 12 PED and PES

What is the formula for PES?

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What does a PED of 0.8 indicate?

• Elastic demand

• Inelastic demand

• Perfectly inelastic demand

• Perfectly elastic demand

In what circumstance would supply of a product be elastic?

• It can be stored

• It is costly to produce

• It takes time to produce

• It can easily get mold

Why does travel by private jet have elastic demand?

• It is a necessity

• It has no close substitutes

• It is a luxury form of travel

• It has to be arranged some time in advance

What characteristic is likely to make the demand for a product elastic?

• It is relatively cheap

• It is a habit-forming

• It is a necessity

• It has close substitutes

A rise in the price of a product from $50 to $60 causes demand to fall from 800 to 760. What is the price elasticity of demand?

• 0.25

• 0.5

• 2.0

• 4.0

Which diagram illustrates inelastic supply?

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