Chapter 9, 10, 11 - Price determination, price change, price elasticity of demand

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9 Terms

1
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<p>equilibrium price</p>

equilibrium price

demand = supply

2
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<p>disequlibrium </p>

disequlibrium

demand ≠ supply (excess supply or demand)

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why is there price changes?

changing market conditions

4
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<p>example of the effect on equilibrium price when the demand for oil has decreased</p>

example of the effect on equilibrium price when the demand for oil has decreased

.

5
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<p>formula for price elasticity of demand (PED)</p>

formula for price elasticity of demand (PED)

% change in quantity demanded/ percentage change in price

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price elasticity of demand

a measure of the resposiveness of athe quantity demanded to a change in price

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elastic demand

when the quantity demanded changes by a greater percentage than the change in price

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<p>inelastic demand</p>

inelastic demand

when the quantity demanded changes by a smaller percentage than the change in price

9
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determinants of PED

availability of substitutes, proportion of income spent on the product, how the market is defined, is it a necessity or a luxury