Market & Industry; Elasticity and Monopolistic Competition

These flashcards cover key concepts related to elasticity, competition, and economic metrics relevant to market analysis and decision making.

Elasticity

The responsiveness of one variable to a change in another variable.

Price Elasticity of Demand (PED)

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

Inelastic Demand

When the price elasticity of demand is less than 1. A change in price causes a smaller proportional change in quantity demanded.

Elastic Demand

When the price elasticity of demand is greater than 1. A change in price causes a larger proportional change in quantity demanded.

Monopolistic Competition

A market structure where many firms produce differentiated products and have some price-setting power.

Total Revenue (TR)

Calculated as the product of price per unit (P) and quantity sold (Q). TR = P x Q.

Income Elasticity of Demand

The responsiveness of demand to a change in consumer incomes.

Cross-Price Elasticity of Demand

The responsiveness of the demand for one good to the change in the price of another good.

Barriers to Entry

Obstacles that prevent new competitors from easily entering a market.

Differentiated Product

A product that is distinct and unique compared to competing products.