B5-M3 Flashcards by Niamh O'Sullivan | Brainscape

Q

Elasticity

A

-measure of how sensitive the demand/ supply of a product is to change in PRICE

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Q

Surplus created when

A

Supply> demand

-Minimum price is set above equilibrium

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Q

Elasticity of demand

A

= % change in quantity demanded/ % change in price

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Q

Elasticity of supply

A

= % change in quantity supplied/ % change in price

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Q

Shortage

A

when a maximum/ ceiling price is set below the equilibrium

- causes excess demand

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Q

Shortage

A

when a maximum/ ceiling price is set below the equilibrium
causes excess demand
caused by government price support programs (subsidy)

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Q

Collusive pricing

A

-anticipates that competitors will collude to maintain prices and profitability

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