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Line 14: − + − − NEARLY VERTICAL FOR A VERY INELASTIC DEMAND CURVE, FOR THE OPPOSITE REASON.
Economics Homework 3 - Model (view source)
Revision as of 15:45, March 28, 2013
, 15:45, March 28, 2013no edit summary
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.
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?