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25 Cards in this Set
- Front
- Back
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Price control |
Government control or regulation that sets or limits the price to be charged for a particular good shirt |
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Shortage happens when |
Government sets the price ceiling below equilibrium |
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Price elasticity of demand |
Percentage change in quantity demanded / percentage change of price of good |
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Higher price elasticity = |
More sensitivity to price changes |
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Price elasticity of demand is a |
Unit free measure |
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Midpt formula of price elasticity of demand |
See pic |
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Ed is greater than 1 |
Demand is elastic |
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Ed = 1 |
Demand is unit elastic |
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Ed is less than 1 |
Demand is inelastic |
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Perfectly inelastic |
Vertical line (Ed=0) |
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Perfectly elastic |
Horizontal line (Ed= infinity) |
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Revenue of firm |
Price times quantity sold |
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When demand is price elastic total revenues will ____ as the price _____ |
Rise, declines |
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When demand is price inelastic total revenues ____ as price ____ |
Fall and declines |
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Good with a lot of substitutes have a _____ price elasticity |
High |
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Goods with few substitutes |
Low price elasticity of demand |
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If price change is temporary |
Price elasticity of demand will be high |
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If price change is permanent |
Price elasticity of demand is low |
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Price elasticity of supply |
Percentage change in quantity supplied / percentage change in the price |
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Elastic supply is where |
Price elasticity is greater than 1 |
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Inelastic supply is where |
price elasticity is less than 1 |
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Unit elastic supply is where |
Price elasticity is equal to 1 |
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Perfectly Elastic supply |
Horizontal line |
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Perfectly inelastic supply |
Vertical line |
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Elasticity is a measure of |
The sensitivity of 1 economic variable to another |
