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