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Economics Homework Three Answers - Student Ten (view source)
Revision as of 01:24, March 9, 2011
, 01:24, March 9, 2011no edit summary
'''1. Give an example of a good that has a large price elasticity, meaning that a small decrease in price causes a big increase in demand.'''
'''1. Give an example of a good that has a large price elasticity, meaning that a small decrease in price causes a big increase in demand.'''
Gold. When the market price goes down people buy more because it is a good investment and they know the price will eventually go back up.
Gold. When the market price goes down people buy more because it is a good [[investment]] and they know the price will eventually go back up.
:Interesting example!
:Interesting example!
:Right, but note that income elasticity is specific to a particularly good, just as price elasticity is. (Minus 1).
:Right, but note that income elasticity is specific to a particularly good, just as price elasticity is. (Minus 1).
'''3. A nearly perfectly elastic [[demand curve]] is nearly''' ''vertical'' '''in shape; a nearly perfectly inelastic demand curve is nearly''' ''horizontal'' '''in shape.'''
'''3. A nearly perfectly elastic demand curve is nearly''' ''vertical'' '''in shape; a nearly perfectly inelastic demand curve is nearly''' ''horizontal'' '''in shape.'''
:The opposite is true. (Minus 1).
:The opposite is true. (Minus 1).