Lecture on Elasticity of Demand

This set of flashcards covers the key concepts and terms related to elasticity of demand as outlined in Module 48.

Income Elasticity of Demand

Measures how demand changes when income changes.

Normal Good

A good for which demand increases when income rises.

Inferior Good

A good for which demand decreases when income rises.

Cross-Price Elasticity of Demand

Measures how the demand for one good responds to the price change of another good.

Substitutes

Goods that can replace each other; an increase in the price of one leads to an increase in demand for the other.

Complements

Goods that are often consumed together; an increase in the price of one leads to a decrease in demand for the other.

Demand Curve Shift

Occurs as a result of changes in income or prices affecting demand.