Term
|
Definition
| a measure of the responsiveness of quantity demanded of quantity supplied to one of its determinants |
|
|
Term
| Price Elasticity of Demand |
|
Definition
| a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price |
|
|
Term
|
Definition
| if the quantity demanded or quantity supplied responds substantially to changes in the price; when the elasticity is greater than one, so that quantity moves proportionately more than the price |
|
|
Term
|
Definition
| if the quantity demanded or quantity supplied responds only slightly to changes in price; when the elasticity is less than one, so that quantity moves proportionately less than the price |
|
|
Term
|
Definition
| when elasticity is exactly one, so that quantity moves the same amount proportionately as price |
|
|
Term
|
Definition
| regardless of the price, the quantity demanded/supplied stays the same |
|
|
Term
|
Definition
| very small changes in the price lead to huge changes in the quantity demanded/supplied |
|
|
Term
|
Definition
the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold
(Inelastic: increase in price=increase in revenue)
(Elastic: increase in price=decrease in revenue) |
|
|
Term
| Income Elasticity of Demand |
|
Definition
| a measure of how much the quantity demanded of a good responds to a change in consumers' income, computed as the percentage change in quantity demanded divided by the percentage change in income |
|
|
Term
| Cross-Price Elasticity of Demand |
|
Definition
| a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good |
|
|
Term
| Price Elasticity of Supply |
|
Definition
| a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divded by the pecentage change in price |
|
|
