Understanding the Global Economy - Elasticity

Vocabulary flashcards covering key concepts from elasticity in economics.

Elasticity

A measure of how sensitive buyers and sellers are to price changes.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product.

Price Floor

A government-imposed lower limit on the price charged for a product.

Tax Incidence

The analysis of the effect of a particular tax on the distribution of economic welfare.

Price Discrimination

The practice of charging different prices to different consumers for the same good or service.

Inelastic Demand

Demand for a product that does not change significantly when prices change.

Elastic Demand

Demand for a product that changes significantly in response to price changes.

Midpoint Formula for Elasticity

A method to calculate elasticity by using the average of the initial and final prices and quantities.

Cross Price Elasticity

The measure of how much the quantity demanded of one good responds to a change in the price of another good.

Deadweight Loss

A loss of economic efficiency that can occur when equilibrium for a good or service is not achieved.