Hubbard O'Brien Microeconomics Chapter 6 Vocab

Elasticity

A measure of how much one economic variable responds to changes in another economic variable.

Price elasticity of demand

The responsiveness of the quantity demanded to a change in price, measured by dividing the percentage change in the quantity demanded of a product by the percentage change in the product's price.

Elastic Demand

the case where the percentage change in quantity demanded is GREATER than the percentage change in price so the price elasticity is greater than one in absolute value

Inelastic Demand

the case where the percentage change in quantity demanded is less than the percentage change in price so the elasticity is less than one in absolute value

Unit-elastic demand

the case where the percentage change in quantity demanded is equal to the percentage change in price so the price elasticity is equal to one in absolute value

perfectly inelastic demand

the case where the quantity demanded is completely unresponsive to price and the price elasticity of demand equals zero

perfectly elastic demand

the case where the quantity demanded is infinitely responsive to price and the price elasticity of demand equals infinity

total revenue

the total amount of funds a seller receives from selling a good or service, calculated by multiplying price per unit by the number of units sold

cross price elasticity of demand

the percentage change in the quantity demanded of one good divided by the percentage change in the price of another good

income elasticity of demand

a measure of the responsiveness of the quantity demanded to changes in income, measured by the percentage change in the quantity demanded divided by the percentage change in income

price elasticity of supply

the responsiveness of the quantity supplied to a change in price, measured by dividing the percentage change in the quantity supplied of a product by the percentage change in the product's price