Term
| Price Elasticity of Demand |
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Definition
| the ratio of the percent change in quantity demanded to the percent change in the price in a demand curve. |
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Term
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Definition
| a technique for calculating the percent change. in this approach, we calculate changes in a variable composed with the average or. midpoint, of the starting and final values |
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Term
| perfectly inelastic demand |
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Definition
| exists when the quantity demanded does not respond at all to the changes in the price. When demand is perfectly in-elastic the demand curve is a vertical line. |
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Term
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Definition
| when any price increases will cause the quantity demanded to drop to zero when demand is perfectly elastic, the demand curve is a horizontal line. |
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Term
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Definition
| exists when the price elasticity of demand is greater than one (inelastic if the price of demand is less than one, and unit-elastic if the price elasticity of demand is exactly one. |
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Term
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Definition
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Term
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Definition
| total value of sales of goods/services= the price multiplied by the quantity sold. |
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Term
| Cross-Price Elasticity of Demand |
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Definition
| between two goods measures the effect of the change in ones goods price on the quantity demanded of the other good. it is equal to the percent change in the quantity demanded of one good divided by the percent change in the other goods price. |
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Term
| Income elasticity of Demand |
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Definition
| the percent change in the quantity of a good demanded when a consumer income changes divided by the percent change in the consumers income. |
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Term
| Price elasticity of supply |
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Definition
| is a measure of the responsiveness of the quantity of a good supplied to the price of that good. it is the ratio of the percent change in the quantity supplied to the percent change in the price as we move along the supply curve. |
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Term
| perfectly inelastic supply |
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Definition
| exists when the price elasticity of supply is zero, so that changes in the price of the good have no effect on the quantity supplied. a perfectly inelastic supply curve is a vertical line. |
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Term
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Definition
| exists when a small increase or reduction in the price leads to a very large change in the quantity supplied, so that the price elasticity of supply is the infinite. a perfectly elastic supply curve is a horizontal line. |
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