BEC 5: Economic Concepts and Analysis Flashcards
1
Q
a measure of the sensitivity of the demand for a product to a change in price
A
price elasticity
2
Q
how is price elasticity calculated?
A
% change in quantity demanded / & change in price
3
Q
goods with an elasticity above 1.0 are considered:
A
elastic - sensitive to price changes
4
Q
goods with elasticity below 1.0 are considered:
A
inelastic - not sensitive to price changes
5
Q
a firm has more influence of the price and can afford to incur higher costs because they can charge more for the product, what type of market is this?
A
monopolistic competition
6
Q
there is very little differentiation, prices are set by the market, and costs have to be set low for a company to survive, what type of market is this?
A
perfect competition
