4&5- market D & elasticity Flashcards
1
Q
income elasticity of demand, ε
A
% change Qd response to given % change in income
2
Q
ε equation
A
% change Q / % change Y
3
Q
ε>0
A
normal good, Y increase = more of good bought
4
Q
1 > ε > 0
A
necessary good
5
Q
ε > 1
A
luxury good
6
Q
ε < 0
A
inferior good
7
Q
price elasticity, |ε |
A
D responsiveness to change in P
8
Q
price elasticity equation
A
(%∆Q)/(%∆P )
9
Q
|ε |>1
A
elastic D
10
Q
|ε | = 1
A
unit elastic D
11
Q
|ε |<1
A
inelastic D
12
Q
what is used to calculate the shape of elasticity curve
A
engel curve
13
Q
factors determining price elasticity
A
availability of substitutes, length of adjustment period, proportion of budget a good represents
14
Q
cross price elasticity
A
how the change in P of one good affects D of another
15
Q
cross price elasticity equation
A
(%∆Q(g1)) / (%∆P (g2) )
