GOOD COPY ELASTICITY FLASHCARDS

Elasticity

entent of sensitivity to a change in variable

Price Elasticity of Demand (KEY) and formula

the responsiveness of consumers due to a change in price

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formula - Change in quantiity demanded

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og quantity demanded

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change in price

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og price

Elastic price elasticity of demand

percentage change in demand will be greater than percentage change in price

inelastic price elasticity of demand

percentage change in price will be greater than percentage change in demand

elastic good

a good is considered elastic if a small change in price significantly impact the quantity demanded

inelastic good

a good is inelastic if a change in price will only slightly change quantity demanded

elasticity coefficient and law of demand

0- no law of demand

factors affecting price elasticity of demand

substitues available

neccesity or luxury

income spent

time

breadth of market -amount available

midpoint method formula

change in percentage quantity

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quantity average

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percentage change in price

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price average

total revenue

price x quantity

relationship between total revenue and price on a elastic good

* Increase in price leads to fall in TR
* Decrease in price leads to rise in TR
* inverse relationship

lationship between total revenue and price on a inelastic good

* increasein price increase in total revenue
* decrease in price, decrease in total revenue
* inverse relationship between the 2

price discrimination

charging different prices for diferent people in order to maxamize profits

elasticity on demand curve and the imact of price chaneg at a different price

at a dofferemt \[roce changes in price may be more or less inelastic e.g price change from $5 to 6 will be less inelastic than change from $0.10 and $1.10

where is TR maxamized on the demand curve

maxamized at the middle of the demand curve as that is where demand is unitary

define price elasticity of supply

the responsvieness of producers to a change in price of a product

formula for calculating price elasticity of supply

quantity supplied

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og quantity

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change in price

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og price

elastic supply

producers can quickly react to a change in price and can increase or decrease amount of quantity supplied quickly with minimol rise on cost or time delay

inelastic supply

firm find it hard to react quickly to a

change in price and change their prodcution given time frame

elastic supply of good

slight change in price created sharp change in quantity supplied

inelastic supply of a good

change in price of a good while have slight effect on amount quantity supplied

determine wether shoes are elastic or not

increase in price from 150 190

quantity supply increase from 300 to 400

100

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300

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40

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150

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=1.25 >1 = elastic

factor impacting price elasticity of supply

time

nature of industry

ability hold stock

spare capacity

flexability of resources

when doing explaine question in extended response mention

extent of sensitivity to a change in variable usually price