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Chapter 5 Elasticity and Its Applications

Mankiw: Priciples od Economics Chapter 5 Elasticity and Its Applications Review Questions What is Elasticity and why do economists use the concept? ANSWER: Elasticity is a measure of relative responsiveness of supply or demand to changes in one of the determinants of supply or demand. Economists use the concept in order to analyze the percentage change in supply or demand that occurs as a result of a 1 percent change in a determinant. It allows economists to conduct a quantitative analysis of supply and demand rather than simply a qualitative analysis. Why do economists use Elasticity instead of slope to measure the response of quantity to changes in price?

Chapter 5 Elasticity and Its Applications Review Questions What is elasticity and why do economists use the concept? ANSWER: Elasticity is a measure of relative responsiveness of supply or demand to changes in one of the determinants of supply or demand. Economists use the concept in order to analyze the

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