AP Econ Chapter 5
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22 Terms
% Change in Price
% Change in Qd
Price Elasticity of Demand
Cross-Price Elasticity of Demand
Income Elasticity of Demand
Price Elasticity of Supply
Utility-Maximization Rule
Consumer Surplus
the difference between
the highest price a consumer would pay for
a product and the actual price paid
Cross-Price Elasticity
the percentage
change in demand for good X if there is a
price change for good Y
Diminishing Marginal Utility
when each
additional unit consumed yields less
additional satisfaction
Elasticity
a measure of how producers and
consumers respond to price changes
Excise Tax
a per-unit tax on production
Income Elasticity of Demand
how a change
in income affects the quantity demanded
Marginal Utility
the change in total utility
Price Ceiling
a maximum legal price
(binding if below equilibrium)
Price Elasticity of Demand
how consumers
respond to price changes
Price Floor
a minimum legal price (binding
if above equilibrium)
Producer Surplus
the difference between
the lowest price a producer would sell for
and the actual price received
Total Revenue
the total money from sales
(price × quantity)
Total Revenues Test
determines elasticity
by comparing price and total revenue
Total Utility
total satisfaction from
consumption of goods or services
Utility-Maximization Rule
consumers
maximize utility when MUx/Px = MUy/Py