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the flatter the curve …
the bigger the elasticity
the steeper the curve …
the smaller the elasticity
price elasticity of demand is ______ when there are close substitutes
higher
price elasticity of demand is ______ when the good is narrowly defined
higher
price elasticity of demand is ______ when the good is a luxury
higher
price elasticity of demand is ______ when the good is a necessity
lower
price elasticity of demand is ______ in the long run
higher
price elasticity of demand is ______ in the short run
lower
the good for which Qd falls the ____ has the highest price elasticity of demand
most
price elasticity of demand: equation
(% change in Qd)/(% change in P)
midpoint method: equation
( (end value) - (start value) ) / (start value) x 100
we ____ the negative sign of price elasticity
drop
price elasticity of demand measures the …
price sensitivity of buyers’ demand
elasticity measures how much …
one variable responds to changes in another variable
elasticity is a ____ measure of the responsiveness
numerical
the law of demand says that you _____ sell as many websites if you raise your price
won’t
if prices go up, this causes people to buy ____
less
elasticity is all about trying to measure how _____ people respond to changes in prices/ and or income
strongly
“perfectly inelastic demand”: means the curve is _______
vertical
“perfectly inelastic demand”: consumers’ price sensitivity is ____
0
“perfectly inelastic demand”: elasticity is ____
0
“inelastic demand”: means the curve is _________
relatively steep
“inelastic demand”: consumers’ price sensitivity is ______
relatively low
“inelastic demand”: elasticity is _______
<1
“unit elastic demand”: means the curve is _____
an intermediate slope
“unit elastic demand”: consumers’ price sensitivity _______
intermediate
“unit elastic demand”: elasticity is _____
1
“elastic demand”: means the curve is _______
relatively flat
“elastic demand”: consumers’s price sensitivity is _________
relatively high
“elastic demand”: elasticity is _____
> 1
“perfectly elastic demand”: means the curve is _______
horizontal
“perfectly elastic demand”: consumers’s price sensitivity is _________
extreme
“perfectly elastic demand”: elasticity is _____
infinity
this graph represents which curve:
perfectly inelastic demand
this graph represents which curve:
inelastic demand
this graph represents which curve:
unit elastic demand
this graph represents which curve:
elastic demand
this graph represents which curve:
perfectly elastic demand
the slope of a linear demand curve is _____
constant
the elasticity of a linear demand curve is ______
not constant
Revenue =
Price x Quantity Demanded
price increase has 2 effects on revenue: effect #1
higher price means more revenue on each unit you sell
price increase has 2 effects on revenue: effect #2
you sell fewer units (lower Q), due to Law of Demand
P = amount ____ by buyers and _____ by sellers of the good
paid, received
P and Q move in ______ directions
opposite
increase in price causes a big ____ in demand
decrease
when D is elastic, a price increase causes revenue to ____
fall
when D is inelastic, a price increase causes revenue to ____
rise
elastic means that its number is ___ than 1
greater
inelastic means that its number is ____ than 1
less
price elasticity of supply measure how much …
quantity supplied responds to a change in price
price elasticity of supply measures the ______ of sellers’ supply
price-sensitivity
price elasticity of supply: equation
% change in Qs / % change in P
“perfectly inelastic”: means the S curve is ____
vertical
“perfectly inelastic”: sellers’ price sensitivity is ___
0
“perfectly inelastic”: elasticity is __
0
“inelastic”: means the S curve is ____
relatively steep
“inelastic”: sellers’ price sensitivity is _____
relatively low
“inelastic”: elasticity is ____
< 1
“unit elastic”: means the S curve is ____
an intermediate slope
“unit elastic”: sellers’ price sensitivity is ___
intermediate
“unit elastic”: elasticity is ___
1
“elastic”: means the S curve is ______
relatively flat
“elastic”: sellers’ price sensitivity is ______
relatively high
“elastic”: elasticity is ___
> 1
“perfectly elastic”: means the S curve is ____
horizontal
“perfectly elastic”: sellers’ price sensitivity is _____
extreme
“perfectly elastic”: elasticity is ___
infinity
if increased production is very expensive, then the supply curve will be ____
inelastic
if production can be increased cheaply, then the supply curve will be ____
elastic
Two determinants of Supply Elasticity:
availability of input and time
price elasticity of supply ____ as producers have more time to respond to price changes
increases
long-run price elasticity of supply is usually ____ than the short-run elasticity
higher
supply often becomes _____ elastic as Q rises, due to capacity limits
less
income elasticity of demand measure the …
response of Qd to a change in consumer income
income elasticity of demand: equation
% change in Qd / % change in income
an increase in income causes an ____ in demand for a normal good
increase
for normal goods, income elasticity is ___ 0
greater than
for inferior goods, income elasticity is _____ 0
less than
cross-price elasticity of demand measure …
the response of demand for one good to change in the price of another good
cross-price elast. of demand: equation
% change in Qd for good 1 / % change in price of good 2
cross-price elast. of demand: for substitutes, cross-price elasticity is _____ 0
greater than
cross-price elast. of demand: for compliments, cross-price elasticity is _____ 0
less than
Note 
Flashcard (21)