Changes

1.  What is a substitute for french fries, and what is a complement for them?

 

1.  What is a substitute for [[French fries]], and what is a complement for them?

:Substitutes:  hash browns, fruit, baked potato, salad, etc.

:Substitutes:  hash browns, fruit, baked potato, salad, etc.

4. In connection with price elasticity of demand, a nearly perfectly elastic demand curve is nearly ________ in shape, while a nearly perfectly inelastic demand curve is nearly __________ in shape.

4. In connection with price elasticity of demand, a nearly perfectly elastic demand curve is nearly ________ in shape, while a nearly perfectly inelastic demand curve is nearly __________ in shape.

:horizontal ... vertical.  Nearly perfectly elastic demand curve means that a small change in price (graphed on the Y-axis) means a big change in quantity demanded (graphed on the X-axis), which is a nearly horizontal line.  Conversely, a nearly perfectly inelastic demand curve means that a big change in price causes a small change in quantity demanded, which is a nearly vertical line.

:horizontal ... vertical.  Nearly perfectly elastic demand curve means that a small change in price (graphed on the Y-axis) means a big change in quantity demanded (graphed on the X-axis), which is a nearly horizontal line.  Conversely, a nearly perfectly inelastic demand curve means that a big change in price causes a small change in quantity demanded, which is a nearly vertical line with P on the Y-axis and Q on the X-axis.

NEARLY VERTICAL FOR A VERY INELASTIC DEMAND CURVE, FOR THE OPPOSITE REASON.  

5. '''''Why''''' is the name "necessity" given to a good that has an income elasticity of less than one, and the name "luxury" given to a good that has an income elasticity of more than one?

5. '''''Why''''' is the name "necessity" given to a good that has an income elasticity of less than one, and the name "luxury" given to a good that has an income elasticity of more than one?

:A price ceiling causes a shortage because it both reduces supply (fewer people want to produce the good to sell at the low price) and increases demand (more people want to buy the good at the low price).

:A price ceiling causes a shortage because it both reduces supply (fewer people want to produce the good to sell at the low price) and increases demand (more people want to buy the good at the low price).