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19 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Elasticity
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Responsiveness or sensitivity
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Price elasticity of demand
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a commodity is a mearsuement of consumers' responsieness or sensitivity to a price change
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Formula for Price Elasticity of Demand
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Ed = %Qd/%Px
absolute value all numbers positive |
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Ed > 1
Ed = 1 Ed < 1 Ed = 0 Ed = 8turned side ways #8 |
Demand is Elastic
Demand is Unit Elastic Demand is Inelastic Demand is Perfectly Inelastic Demand is Perfectly Elastic |
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Higher Elasticity
Lower Elasticity |
more responsive
less responsive |
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The Midpt Formula
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Ed = %Qd/%Px = Q2-Q1/Q1+Q2/2/P2-P1/P1+P2/2
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Point Elasticity Formula
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Ed = 1/P/Q
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Total Revenue
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refers to the total receipts form the sale of a product during a specific time period
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P down Q Up TR Up
P down Q Up TR constant P down Q Up TR down |
Elastic
Unit Elastic Inelastic |
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Determinants of Price Elasticity of Demand (4 bullets)
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the availability of substitutes, proportion of income, luxuries vs.necessities, & time
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Price elasticity of supply
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a commodity is a measurement of producers' responsiveness or sensitivity to a price change
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not to consumers'
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Formula for Price Elasticity of Supply
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Es = %Qsx/%Px
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Arc Elasticity: Midpt Formula
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Es = %Qsx/%Px = Q2-Q1/Q1+Q2/2/P2-P1/P1+P2/2
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Price Elasticity of supply
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alternative uses
market period short run long run |
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Cross-price-elasticity of demand
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between 2 commodieties X and Y, is the mearsurement of the extent to which the quanitity demanded of good X responds to a change in price of good Y
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Croos-price0elasticity equation
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Exy = %Qd/%Py
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Exy > 0
Exy = 0 Exy < 0 |
Substitues
Independent complements |
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Income elasticity of demand
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measurement of consumers' responsiveness or sensitivity to an income change
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Income Elasticity of Demand
Er > 0 Er < 0 |
Ey = %Qd/%Y
Normal Goods Inferior Goods |
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