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N_P_Key_Ch_6_p_20 - Some concepts and vocabulary Price...

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Unformatted text preview: Some concepts and vocabulary Price elasticity of demand Elastic demand Inelastic demand Unit elastic demand Income elasticity Normal goods Inferior goods Cross—price elasticity of demand Price elasticity of supply Elasticity changes along a straight line demand curve Practice Problems: Consider the market for pizza. If a 10% decrease in price leads to a 15% increase in the quantity demanded, what is the price elasticity of demand? Would you classify this as elastic, inelastic, or unit elastic? prime, flywdui‘lfi ‘5]le '*‘ fl; *5 «LS -* 106/0 ”61 ) @eflasfi; In order 20 prove that Motrin and Ibuprofin are substitutes, one should test the —and get a . price elasticity of demand, number greater than one (in absolute value) price elasticity of demand; number less than one (in absolute value) a. b. @ cross—pm 'ce elasticity; positive number (:1. cross— price elasticity; negative number 20 ...
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