Demand Elasticity Concepts
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9 Terms
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Price Inelastic Demand
Increase in price leads to higher total expenditures.
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Law of Diminishing Marginal Utility
Demand curve falls as consumption increases.
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Consumer Surplus
Excess of what Elaine is willing to pay over actual cost.
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Inelastic Demand for Salt
Due to few substitutes and low budget percentage.
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Price Elastic Demand
Price drop increases total expenditures.
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Income Elasticity of Demand
Change in quantity demanded over change in income.
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Substitution Effect
No effect if relative prices remain constant.
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Unitary Demand
Price increase doesn't change total expenditures.
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Price Elasticity
Demand is elastic if quantity reduction exceeds price increase.
Note 
Flashcards (26)