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20 Cards in this Set
- Front
- Back
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complements
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goods that are used together; as the price of one rises, the demand for the other falls
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cross elasticity of demand
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the percentage change in the demand for one good divided by the percentage change in the price of a related good, everything else held constant
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elastic demand
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price elasticity is between negative 1 and negative infinity
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incidence
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a measure of who pays a tax
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income elasticity of demand
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the percentage change in the demand for a good divided by the percentage change in income, everything else held constant
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inelastic demand
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price elasticity is between zero and negative 1
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inferior good
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goods for which the demand decreases as income increases; goods for which the income elasticity of demand is negative
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long run
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a period of time long enough that the quantities of all resources can be varied
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luxury good
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goods for which the income elasticity of demand is a large positive number
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normal good
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goods for which the demand increases as income increases; goods for which income elasticity of demand is positive
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perfectly elastic demand
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a horizontal demand curve indicating that all consumers can and will purchase all the want at one price
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perfectly inelastic demand
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a vertical demand curve indicating that there is no change in the quantity demanded as the price changes
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price elasticity of demand
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the percentage change in the quantity demanded of a product divided by the percentage change in the price of that product
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price elasticity of supply
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the percentage change in the quality supplied divided by the percentage change in price, everything else held constant.
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short run
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a period of time short enough that the quantities of at least one of the resources used cannot be vaired
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substitutes
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goods that can be used in place of each other; as the price of one rises, the demand for the other rises
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total revenue
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total revenue = price multiplied by quantity sold
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total revenue test
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total revenue increases as price increases if demand is inelastic; total revenue decreases as price increases if demand is elastic; total revenue does not change as price is increased if the demand is unit elastic
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unit elasticity
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price elasticity is negative 1
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price discrimination
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charging different customers different prices for the same product
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