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13 Cards in this Set
- Front
- Back
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Elasticity |
a measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants |
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Price of Elasticity of Demand |
a measure of how much the quantity demanded of a good responds to a price of that good, computed as the percentage changes in quantity demanded divided by the percentage change in price |
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Elastic |
if demand responds to a change in price |
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Inelastic |
if the quantity demanded only responds slightly to a change in price |
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Price of Elasticity of Demand Formula |
% Change in Quantity Demanded _____________________________________ % Change in Price |
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Midpoint Method |
(Q2-Q1)/[(Q2+Q1)/2] ______________________ (P2-P1)/[(P2+P1)/2] |
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Unit Elasticity
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elasticity of exactly 1 |
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Inelastic |
elasticity of less than 1 |
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Elastic |
elasticity of greater than 1 |
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Total Revenue |
the amount paid by buyers and received by sellers of a good
Formula: Q x P |
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Income Elasticity of Demand |
a measure of how much the quantity demanded of a good responds to a change in consumers' income, computed as the percentage change in quantity demanded divided by the percentage change in income |
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Cross-Price Elasticity of Demand |
a measure of how much the quantity demanded of one good responds to a change in the price of another good
computed as the percentage change in the quantity demanded divided by the percentage change in the price of the second good |
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Price Elasticity of Supply |
a measure of how much the quantity supplied of a good responds to a change in the price of that good
computed as the percentage change in quantity supplied divided by the percentage change in price
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