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Quick Revision Quiz
Describe and draw the effect on equilibrium diagram of: Less Demand
→ Demand shifts left → Lower Price → Lower Quantity
What will cause a Contraction in the Demand curve?
An increase in price
Draw a Supply curve with Perfectly Inelastic PES
On a linear demand curve, revenue is maximised where PED = _____ .
-1
Fill in the blank: If demand is price inelastic, it means that Quantity Demanded changes ____ than ______ following a change in price.
less ... proportionally
Draw the Supply Curve
Define Ceteris Paribus
Latin for "holding other things constant". Meaning that when we change one variable, we assume all other variables are the same as they were.
A product which is a necessity will have PED that is __________.
Inelastic
The broader the definition of the product, the more __________ it will be.
Inelastic
What is meant by 'elasticity'?
The responsiveness of one variable to a change in another variable.
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