Chapter 4 - Elasticity
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23 Terms
1
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Price elasticity of demand
percentage change in the quantity demanded of a good/service that results from a 1 percent change in its price
2
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Perfectly elastic demand
demand is perfectly elastic with respect to price if price if elasticity of demand is infinite
3
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Perfectly inelastic demand
demand is perfectly inelastic with respect to price if price elasticity of demand is zero
4
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Total daily expenditure on a good
daily number of units bought times the price for which it sells
5
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Total Expenditure = Total Revenue
The dollar amount that consumers spend on a product (P x Q) is equal to the dollar amount that sellers receive
6
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Cross-price elasticity of demand
percentage by which the quantity demanded of the first good changes in response to a 1 percent change in the price of the second
7
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Income elasticity of demand
percentage by which quantity demanded changes in response to a 1 percent change in income
8
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Price elasticity of supply
percentage change in quantity supplied that occurs in response to a 1 percent change in price
9
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Perfectly inelastic supply
supply is perfectly inelastic with respect to price if elasticity is zero
10
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Perfectly elastic supply
supply is perfectly elastic with respect to price if elasticity of supply is infinite
11
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Price elasticity of demand
Percentage change in the quantity demanded of a good/service that results from a 1 percent change in its price
12
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Elastic demand
The demand for good is elastic with respect to price if its price elasticity of demand is greater than 1
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Inelastic demand
The demand for a good is inelastic with respect to price if its price elasticity of demand is less than 1 unit
14
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Unit elastic demand
The demand for a good is unit elastic with respect to price if its price elasticity of demand equals 1
15
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Perfectly elastic demand
Demand is perfectly elastic with respect to price if price if elasticity of demand is infinite
16
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Perfectly inelastic demand
Demand is perfectly inelastic with respect to price if price elasticity of demand is zero
17
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Total daily expenditure on a good
Daily number of units bought times the price for which it sells
18
New cards
Total expenditure = Total revenue
The dollar amount that consumers spend on product (P x Q) is equal to the dollar amount that sellers receive
19
New cards
Cross-price elasticity of demand
Percentage by which the quantity demanded of the first good changes in response to a 1 percent change in the price of the second
20
New cards
Income elasticity of demand
Percentage by which quantity demanded changes in response to a 1 percent change in income
21
New cards
Price elasticity of supply
Percentage change in quantity supplied that occurs in response to a 1 percent change in price
22
New cards
Perfectly inelastic supply
Supply is perfectly inelastic with respect to price if elasticity is zero
23
New cards
Perfectly elastic supply
Supply is perfectly elastic with respect to price if elasticity of supply is infinite