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### 21 Cards in this Set

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• Back
 queuing Waiting in line as a means of distributing goods and services; a nonprice rationing mechanism favored customers Those who receive special treatment from dealers during situations of excess demand ration coupons Tickets or coupons that entitle individuals to purchase a certain amount of a given product per month black market A market in which illegal trading takes place at market-determined prices elasticity A general concept used to quantify the response in one variable when another variable changes price elasticity of demand The ratio of the % of change in quantity demanded to the % of change in price; measures the responsiveness of demand to changes in price. perfectly inelastic demand Demand in which quantity demanded does not respond at all to a change in price inelastic demand Demand that responds somewhat, but not a great deal, to changes in price. Inelastic demand always has a numerical value between zero and 1 unitary elasticity A demand relationship in which the % change in quantity of a product demanded is the same as the % change in price in absolute value ( a demand elasticity of 1) elastic demand A demand relationship in which the % change in quantity demanded is larger in absolute value than the % change in price ( a demand elasticity with an absolute value great than 1) perfectly elastic demand Demand in which quantity demanded drops to zero at the slightest increase in price. price elasticity of demand= % change in quantity demanded / % change in price % change in quantity demanded Q²-Q¹/ Q¹ X 100% % change in price P²-P¹/ P¹ X 100% midpoint formula Q²-Q¹/ (Q²+Q¹)/ 2 X 100% income elasticity of demand % change in quantity demanded / % change in income cross price elasticity of demand a measure of the response of the quantity of one good demanded to a change in the price of another good cross price formula % change in quantity of Y demanded / % change in price of X elasticity of supply a measure of the response of quantity of a good supplied to a change in price of that good. Likely to be positive in output markets elasticity of labor supply a measure of the response of labor supplied to change in the price of labor price rationing The process by which the market system allocates goods and services to consumers when quantity demanded exceeds quantity supplied