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16 Cards in this Set
- Front
- Back
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elasticity
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a term economists use to describe sensitivity
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price elasticity of demand
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the ratio of the percentage change in quantity demanded to a percentage change in price. Its numerical value expresses the percentage change in quantity demanded generated by a 1 percent change in price
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total revenue
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the price of a good multiplied by the number of units sold
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unit elastic
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price elasticity is eqal to 1.0. In this range, price cuts or increases do not change total revenue.
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price elastic
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quality of the range of a demand curve where elasticities of demand are greater than 1.0.
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price inelastic
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quality of the range of a demand curve where elasticities of demand are less than 1.0
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income elastic
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a 1% change in income generates a greater than 1% change in demand
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income inelastic
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a 1% change in income generates a less than 1% change in demand
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inferior goods
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good for which demand decreases when people's incomes increase
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util
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a hypothetical unit used to measure how much utility a person obtains from consuming a good
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utility
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the satisfaction or enjoyment a person obtains from consuming a good
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marginal utility
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the change in total utility a person derives from consuming an additional unit of a good
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law of diminishing marginal utility
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as more of a good is consumed, the utility a person derives from each additional unit diminishes
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price ceiling
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a maximum price set by government below the market generated equilibrium price
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rent control
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government set price ceilings on rent
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price floor
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a minimum price set by government above the market-generated equilibrium price
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