Studied by 8 peoplePrice elasticity of demand
Responsiveness of consumers to a price change
Slope
________ can not be used to judge elasticity.
Midpoint formula
Averages the 2 prices and the 2 quantities as reference points for computing percentages
Elastic
Specific percent change in price results in a larger percent change in quantity demanded; elasticity of demand greater than 1
Inelastic
Specific percent change in price results in a smaller percent change in quantity demanded; elasticity of demand less than 1
Unit elasticity
Percent change in price is equal to resulting percent change in quantity demanded; elasticity of demand equals 1
Perfectly inelastic
Price-elasticity coefficient equals 0; no response to change in price
Perfectly elastic
A small price reduction causes buyers to increase purchases from 0 to all they can obtain; price-elasticity coefficient equals infinity
Total revenue
Total amount seller receives from sale of a product in a particular time period; price * quantity sold
Total-revenue test
Test to infer whether demand is elastic or inelastic
Price elasticity of supply
How easily/quickly producers can shift resources b/w alternative uses
Market period
Period that occurs when the time immediately after a change in market price is too short for producers to respond with a change in quantity supplied
Short run
Period of time too short to change plant capacity but long enough to use the fixed-sized plant more or less intensively
Long run
Period of time that is long enough for firms to adjust plant sizes + for firms to enter or leave the industry
Cross elasticity of demand
How sensitive consumer purchases of one product are to a change in the price of another product
Income elasticity of demand
Degree to which consumers respond to a change in their incomes by buying more or less of a particular good
Consumer surplus
Benefit surplus received by consumers in a market
Producer surplus
Benefit surplus received by producers in a market
Efficiency losses
Reductions of combined consumer + producer surplus
Deadweight loss
Efficiency loss to society
Note 
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