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21 Cards in this Set
- Front
- Back
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Price elasticity of demand |
sensitivity of consumers to a change in price ratio of percentage change in quantity demanded over a percentage change in price |
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Elastic demand |
percentage change in quantity demanded is greater than (one) the percentage change in price |
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Inelastic demand |
percentage change in quantity demanded is less than (one) the percentage change in price |
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Unitary Elastic |
percentage change in the quantity demanded is equal to (one) the percentage change in price |
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Perfectly elastic |
small percentage change in price brings about an infinite percentage change in quantity demanded |
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Perfectly inelastic |
quantity demanded does not change (equal to zero) as the price changes |
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Price elasticity of demand vary along a demand curve? |
Yes |
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Elastic demand |
has many substitutes consumers are sensitive to price change |
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Inelastic demand |
has few substitutes consumers are not sensitive to price change share of budget spent on the good is very small |
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Income elasticity of demand |
ratio of percentage change in the quantity demanded of a good to a given percentage change in income determines whether a good is normal (greater than zero) or inferior (less than zero) |
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Cross elasticity of demand |
ratio of percentage change in the quantity demanded of a good to a given percentage change in the price of another good determines whether a good is substitute (greater than zero) or complimentary (less than zero) |
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Inelastic demand |
Back (Definition) |
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Elastic Demand |
Back (Definition) |
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Perfectly Elastic |
Back (Definition) |
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Perfectly inelastic |
Back (Definition) |
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Unitary elastic |
Back (Definition) |
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Elastic demand |
inverse relationship |
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Inelastic demand |
direct relationship |
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More elastic |
more corporation pays |
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More elastic |
more corporation pays |
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Less elastic |
more consumer pays |
