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15 Cards in this Set

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Elasticity of Demand
THe percentable change in quantity demanded of the product divided by the percentage change in price of the product.
Perfectly elastic demand curve
A horizontal demand curve, indictating that consumers will substitute away from this good as price increases.
Perfectly inelastic Demand Curve
A vertical demand curve indicating that there is no change in the quanity demanded as the price changes.
Total Revenue
= Price X Quantity
Price Discrimination
Charging different customers different prices for the same product.
Determinants of Elasticity of Demand
Existence of substitutes
% of consumer's total budget
Time
Advertizing
"Necessity" of the product
Cross Price Elasticity of Demand
The percentage change in the quantity demanded for one good divided by the percetage change in the price of a related good.
Income elasticity of demand.
% change in the quantity X
_____________________________
% change in income
Normal Goods
Goods with a positive Income elasticity of demand.
Inferior Good
Income elasticty is negative.
PRice elasticity of Supply
Percentage change in quantity supplied of a good divided by by the percentage change in price.
Short run
A time period short enough that at least one of the factors of of proction cannot be varried (usually this is capital).
Long Run
A period of time long enough that all factors of production can be varied.
Tax incidence
A measure of who pays a tax (the consumer of the producer).
Determinants of Elasticity of Supply
Unused capacity and time determine how elastic the supply of a good will be.