Microeconomic Concepts of Demand and Elasticity

This set of flashcards covers key economic concepts related to demand, supply, and elasticity, derived from the notes on microeconomic principles.

Laws of Demand and Supply

Describes the relationship between the quantity of a good that consumers are willing to purchase and the price of that good, showing how demand and supply curves shift due to external factors.

Market Equilibrium

The point where the quantity demanded equals the quantity supplied, and the market is cleared.

Surplus

Occurs when the quantity supplied of a good exceeds the quantity demanded at a specific price.

Shortage

Occurs when the quantity demanded of a good exceeds the quantity supplied at a specific price.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

Inelastic Demand

Demand for a good is considered inelastic when a change in price results in a relatively smaller change in the quantity demanded.

Elastic Demand

Demand for a good is considered elastic when a change in price results in a relatively larger change in the quantity demanded.

Unit Elastic Demand

Demand where the percentage change in quantity demanded is equal to the percentage change in price.

Income Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in consumer income.

Cross Elasticity of Demand

A measure of the responsiveness of the demand for a good to a change in the price of another good.