A Level Economics 1.2.3, 1.2.5 Elasticities

What does a PED value greater than 1 indicate about a good?

• Inelastic demand

• Unitary elasticity

• Elastic demand

• Perfect inelasticity

Which type of goods typically have inelastic demand?

• Goods with many substitutes

• Necessities like petrol or medicine

• Luxury items

• Goods that are expensive

How does the availability of substitutes affect the elasticity of a good?

• More substitutes make demand more elastic

• More substitutes make demand more inelastic

• Substitutes have no effect on elasticity

• Fewer substitutes increase demand

Why is demand usually more inelastic in the short term?

• Consumers cannot change habits or find substitutes immediately

• Prices are lower in the short term

• Producers cannot adjust supply quickly

• Goods are always in surplus

What type of good has perfectly inelastic demand?

• Sports cars

• Insulin for diabetics

• Luxury watches

• Designer clothing

What does a positive XED value indicate about two goods?

• They are unrelated

• They are substitutes

• They are complements

• They are inferior goods

What does a negative XED value signify?

• The goods are substitutes

• The goods are complements

• The goods are inferior

• The goods are luxury items

If the XED between two goods is close to zero, what does that imply?

• The goods are complements

• The goods are unrelated

• The goods are substitutes

• The goods are necessities

What type of goods have a negative YED value?

• Normal goods

• Inferior goods

• Luxury goods

• Complementary goods

What type of YED value would a luxury good have?

• Negative

• Zero

• Greater than 1

• Between 0 and 1