How does the PED vary for a straight downward sloping demand curve ?

PED gets smaller as you go down

Why is a supply curve upward sloping?

Higher price incentive as it is more profitable

What happens when price is above equilibrium level?

Price will be lowered until equilibrium is reached

What will happen to ice cream when cost of milk increases?

new equilibrium price will be higher

What is the assumption of a supply curve?

Firms are motivated by producing the highest profits

What does PES measure?

responsiveness in change of supply to a change in price

studbud

Supply, Demand and Elasticity

15 termsStudBud Administration347 plays

Quiz on Elasticity, included PED, YED, XED and PeoS

Flashcards15 cardsFPractice quizPHost liveL

Questions 15

Answers

1
What characteristics lead to an inelastic PED?
Luxury items
Necessity
Addictive
High cost products
2
What is the YED for a product that had 60% increase in QD when there is a 45% Increase in Y?
1.33
-0.67
-1.33
0.67
3
How does the PED vary for a straight downward sloping demand curve ?
PED is highest at the midpoint
PED gets smaller as you go down
PED is constant
PED gets larger as you go down
4
What YED value would a yacht have?
Between 1 and infinity
Between -1 and -infinity
Between 0 and 1
between 0 and -1
5
Why is a supply curve upward sloping?
Higher price incentive as it is more profitable
as price increases more people want to buy it
as it is the opposite of a demand curve
Higher price means it is more expensive for firms to produce
6
Which curve is downward sloping?
Supply
Demand
PPF
perfectly elastic PED
7
Which two products would have a positive XED?
Composites
Substitutes
Unrelated goods
Complements
8
What is the XED when a products price decreases by 10% and another products QD increase by 5%
-2
0.5
2
-0.5
9
What happens when price is above equilibrium level?
The supply curve will shift right to counteract it
Price will be lowered until equilibrium is reached
The demand curve will shift right to counteract it
Price will be increases until equilibrium is reached
10
Which factors could shift a demand curve?
All of them
Change in demographics
Change in fashion
Change in income
11
What will happen to ice cream when cost of milk increases?
supply is less, so demand decreases
Price decreases so demand increases
there is an excess of supply, so there is a greater demand
new equilibrium price will be higher
12
What is the assumption of a supply curve?
Demand stays constant
Everything stays the same
Producing more is always more profitable
Firms are motivated by producing the highest profits
13
What shifts a supply curve?
Labour costs
Holiday time
income tax
Machinery costs
14
What is meant by extension of supply?
moving up the supply curve
moving down the supply curve
shift of supply curve to the right
Shift of supply curve to the right
15
What does PES measure?
responsiveness in a change in demand to a change in price
responsiveness to a change in supply to a change in demand
responsiveness in change of supply to a change in price
responsiveness to a change in supply to a change in income

Supply, Demand and Elasticity Flashcards | StudBud