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15 Cards in this Set

  • Front
  • Back
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
"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.