Chapter+5+(JEM)+-+Elasticity+and+Its+Application

Elasticity?

 * A measure of the responsiveness of quantity demanded or quantity supplied

Then what determines elasticity of demand or supply?
 * Availability of close substitutes
 * Necessities versus Luxuries
 * Definition of the market
 * Time horizon

Questions 1)  What are the determinants of price elasticity of demand?   2)   How do you calculate total revenue? 3)  What are the other demand elasticities?   4)   What is the price elasticity of supply? Answers 1)  Availability of close substitutes, Necessities versus luxuries, definition of market, time horizon.   2)   Price X quantity 3)  Income elasticity of demand and cross price elasticity of demand.   4)   A measure of how much the quantity supplied of a good responds to a change in the price of that good.