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14 Cards in this Set
- Front
- Back
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price elasticity of demand
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measures how much the quantity demanded responds to a change in price
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elasticity
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measurement of how much consumers respond to changes in these variables
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elastic (demand)
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demand is ___ if the quantity demanded responds substantially to changes in price, >1
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inelastic (demand)
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demand is ___ if the quantity demanded responds only slightly to changes in price, <1
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unit elasticity
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quantity moves the same amount proportionally to the price, =1
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flat vs steep
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the flatter the demand curve that passes through a given point, the greater the price elasticity of demand. The steeper the demand curve that passes through a given point, the smaller the price elasticity of demand
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perfectly inelastic
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demand curve is vertical
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total revenue
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the amount paid by buyers and received by sellers of goods
P x Q |
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when demand is inelastic
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price and total revenue move in the same direction
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when demand is elastic
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price and total revenue move in opposite directions
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if demand is unit elastic
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total revenue remains constant when the price changes
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cross-price elasticity of demand
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measures how the quantity demanded of one good changes as the price of another good changes
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income elasticity of demand
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measure how the quantity demanded changes as consumer income changes
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price elasticity of supply
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measures how much the quantity supplied responds to changes in price
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