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16 Cards in this Set

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  • Back
Define Price Elasticiy of Demand.
measures how much the quantity changes when its price changes
What is the equation for Price Elasticity of Demand?
%change in quantity demanded
_____________________________
% change in price
What is the equation for Tottal revenue?
Price * Quantity = TR
If E is greater than one that price is....?
Elastic
If price is Elastic quantity is....?
moving more quickly than price & increases revnues
If E is less than one price is...?
inelastic
If price is inelastic then quantity is...?
moving slower than price and there is a decrease of revenue
If E is equal to one then price is...?
perfectly elastic
If price is perfectly elastic then...?
It is a straight line
on a linear demand curve the mid point is...?
unitary elastic
On a linear demand curve any point above the mid-point is...?
elastic
On a linear demand curve any point below the mid-point is...?
inelastic
E>1
P X Q = TR
↑ ↓ ↓
↓ ↑ ↑
E<1
P X Q = TR
↑ ↓ ↑
↓ ↑ ↓
E=1
P X Q = TR
↑ ↓ -
↓ ↑ -
Which factors have an influence on Elasticity?
More elastic Less elastic
more substitutes less subs.
luxury necessity
more time short time