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20 Cards in this Set
- Front
- Back
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cross-price elasticity of demand
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a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good
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elastic demand
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quantity demanded is "very" price sensitive; the price elasticity of demand is greater than 1
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elasticity
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a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants
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income elasticity of demand
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a measure of how much the quantity demanded of a good responds to a change in consumers' income, computed as the percentage change in quantity demanded divided by the percentage change in income
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inelastic demand
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quantity demanded is "weakly" price sensitive; the price elasticity of demand is less than 1
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midpoint method
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method of calculating a percentage change using the average or midpoint; instead of initial value
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price elasticity of demand
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a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price
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price elasticity of supply
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a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price
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total revenue
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the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold
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price ceiling
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a legal maximum on the price as which a good can be sold
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price floor
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a legal minimum on the price as which a good can be sold
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tax incidence
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the manner in which the burden of a tax is shared among participants in a market
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consumer surplus
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the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it
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cost
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the value of everything a seller must give up to produce a good
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efficiency
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the property of a resource allocation of maximizing the total surplus received by all members of society
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equity
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the fairness of the distribution of well-being among the members of society
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producer surplus
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the amount a seller is paid for a good minus the seller's cost of providing it
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total surplus
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the total net gain to consumers and producers from trading in the market; the sum of consumer surplus and producer surplus
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welfare economics
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the study of how the allocation of resources affects economic well-being
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willingness to pay
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the maximum amount that a buyer will pay for a good
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