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21 Cards in this Set

  • Front
  • Back
queuing
Waiting in line as a means of distributing goods and services; a nonprice rationing mechanism
favored customers
Those who receive special treatment from dealers during situations of excess demand
ration coupons
Tickets or coupons that entitle individuals to purchase a certain amount of a given product per month
black market
A market in which illegal trading takes place at market-determined prices
elasticity
A general concept used to quantify the response in one variable when another variable changes
price elasticity of demand
The ratio of the % of change in quantity demanded to the % of change in price; measures the responsiveness of demand to changes in price.
perfectly inelastic demand
Demand in which quantity demanded does not respond at all to a change in price
inelastic demand
Demand that responds somewhat, but not a great deal, to changes in price. Inelastic demand always has a numerical value between zero and –1
unitary elasticity
A demand relationship in which the % change in quantity of a product demanded is the same as the % change in price in absolute value ( a demand elasticity of –1)
elastic demand
A demand relationship in which the % change in quantity demanded is larger in absolute value than the % change in price ( a demand elasticity with an absolute value great than 1)
perfectly elastic demand
Demand in which quantity demanded drops to zero at the slightest increase in price.
price elasticity of demand=
% change in quantity demanded / % change in price
% change in quantity demanded
Q²-Q¹/ Q¹ X 100%
% change in price
P²-P¹/ P¹ X 100%
midpoint formula
Q²-Q¹/ (Q²+Q¹)/ 2 X 100%
income elasticity of demand
% change in quantity demanded / % change in income
cross price elasticity of demand
a measure of the response of the quantity of one good demanded to a change in the price of another good
cross price formula
% change in quantity of Y demanded / % change in price of X
elasticity of supply
a measure of the response of quantity of a good supplied to a change in price of that good. Likely to be positive in output markets
elasticity of labor supply
a measure of the response of labor supplied to change in the price of labor
price rationing
The process by which the market system allocates goods and services to consumers when quantity demanded exceeds quantity supplied