Elasticity

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Last updated 9:48 PM on 9/18/26
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13 Terms

1
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Elasticity

How responsive is demand or supply when price changes

2
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Elasticity formula

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3
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Less than 1

inelastic

4
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greater than 1

elastic

5
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Fewer substitutes

inelastic

6
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More substitutes

elastic

7
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Substitutes

positive CPE %DELTA QDX/ %DELTAPY

8
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Complements

Negative CPE CPE %DELTA QDX/ %DELTAPY

9
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IE less than 0

inferior good

10
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IE greater than 1

luxury good

11
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IE between 0 and 1 is

normal good

12
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TR

pricexquantity

A change in price will cause quantity to move in the opposite

direction

► The impact of a change in price P on TR depends on how strongly

consumers respond

► Elasticity depends on the relative magnitude of the percentage

changes in P and Q


13
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PED