Elasticity - Chapter 4 vocab

**elasticity**

a measure of how much consumers and producers will respond to a change in market conditions

**price elasticity of demand**

the size of the change in the quantity demanded of a good or service when its price changes

**mid-point method**

measures percentage change in demand (or supply) relative to a point midway between two points on a curve; used to estimate elasticity

**perfectly elastic**

demand for which the demand curve is horizontal, such that demand could be any quantity at the given price, but drops to zero if the price increases

**perfectly inelastic**

demand for which the demand curve is vertical, in a way such that that the quantity demanded is always the same no matter what the price

**elastic**

demand that has an absolute value of elasticity greater than 1

inelastic

demand that has an absolute value of elasticity less than 1

**unit-elastic**

demand that has an absolute value of elasticity exactly equal to 1

**total revenue**

the amount that a firm receives from the sale of goods and services; calculated as the quantity sold multiplied by the price paid for each unit

**price elasticity of supply**

the size of the change in the quantity supplied of a good or service when its price changes

**cross-price elasticity of demand**

a measure of how the quantity demanded of one good changes when the price of a different good changes

**income elasticity of demand**

a measure of how much the quantity demanded changes in response to a change in consumers’ incomes