객관식
A linear, downward-sloping demand curve is
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4. Elasticity
Elasticity Summary
객관식
What does it mean if demand is elastic or inelastic?
A
Demand is elastic when firms can quickly change the quantity supplied; inelastic when firms cannot change quantity supplied quickly.
B
Demand is elastic when quantity demanded changes a lot in response to income changes; inelastic when quantity demanded changes little in response to income changes.
C
Demand is elastic when quantity demanded changes a lot in response to price changes (price elasticity > 1); inelastic when quantity demanded changes little in response to price changes (price elasticity < 1).
D
Demand is elastic when total revenue rises as price rises; inelastic when total revenue falls as price rises.
검증된 단계별 안내1
Understand that elasticity of demand measures how much the quantity demanded of a good responds to changes in its price.
Recall the formula for price elasticity of demand: \(\text{Price Elasticity of Demand} = \frac{\% \text{ change in quantity demanded}}{\% \text{ change in price}}\).
If the absolute value of price elasticity of demand is greater than 1 (i.e., \(|E_d| > 1\)), demand is considered elastic, meaning quantity demanded changes a lot when price changes.
If the absolute value of price elasticity of demand is less than 1 (i.e., \(|E_d| < 1\)), demand is considered inelastic, meaning quantity demanded changes little when price changes.
Note that elasticity relates to responsiveness to price changes, not to supply changes or income changes, and it affects how total revenue changes when price changes.
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