BEC Economic Theory review 3

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Joens1313
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299494
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BEC Economic Theory review 3
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2015-03-30 00:23:56
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BEC Economic Theory review
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BEC Economic Theory review 3
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  1. What is elasticity?
    elasticity is a measure of how responsive the market is to change in a determinant
  2. What is price elasticity of demand?
    Price elasticity of demand measures responsiveness of demand to changes in price.
  3. If price is elastic, what will happen as price changes?
    Demand will fluctuate as price changes
  4. If price is inelastic, what will happen as price changes?
    demand will not change as price changes.
  5. Increases in production cost are passed on to buyers when demand is -----------------.
    Increases in production cost are passed on to buyers when demand is inelastic.
  6. Increases in production cost are absorbed by sellers when demand is ------------.
    Increases in production cost are absorbed by sellers when demand is elastic.
  7. What factors increase demand elasticity?

    1. classification as a luxury
    2. longer length of time period analyzed
    3. --------------------------
    4. -----------------------------
    • 1. classification as a luxury
    • 2. longer length of time period analyzed
    • 3. greater number of substitutes
    • 4. percent of income spent on that good
  8. What factors increase demand elasticity?

    1. ---------------------
    2. ----------------------------
    3. greater number of substitutes
    4. percent of income spent on that good.
    • 1. classification as a luxury
    • 2. longer length of time period analyzed
    • 3. greater number of substitutes
    • 4. percent of income spent on that good
  9. What is the price elasticity of supply?
    Price elasticity of supply measures responsiveness of supply to changes in price.
  10. What is cross elasticity of demand
    cross-elasticity of demand measures responsiveness of demand to changes in price of another good.  (a substitute)
  11. What is the income elasticity of demand
    income elasticity of demand measures responsiveness of demand to changes in income.

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