ch 3: quantitative demand analysis Flashcards
A measure of the responsiveness of one variable to changes in another variable; the percentage change in one variable that arises due to a given percentage change in another variable.
elasticity
A measure of the responsiveness of the quantity demanded of a good to a change in the price of that good; the percentage change in quantity demanded divided by the percentage change in the price of the good.
own price elasticity of demand
Demand is elastic if the absolute value of the own price elasticity is greater than 1.
elastic demand
Demand is inelastic if the absolute value of the own price elasticity is less than 1.
inelastic demand
Demand is unitary elastic if the absolute value of the own price elasticity is equal to 1.
unitary elastic demand
A measure of the responsiveness of the demand for a good to changes in the price of a related good; the percentage change in the quantity demanded of one good divided by the percentage change in the price of a related good.
cross-price elasticity
Demand is perfectly elastic if the own price elasticity is infinite in absolute value. In this case the demand curve is horizontal.
perfectly elastic demand
Demand is perfectly inelastic if the own price elasticity is zero. In this case the demand curve is vertical.
perfectly inelastic demand
Demand is log-linear if the logarithm of demand is a linear function of the logarithms of prices, income, and other variables.
log-linear demand
A measure of the responsiveness of the demand for a good to changes in consumer income; the percentage change in quantity demanded divided by the percentage change in income.
income elasticity
The line that minimizes the sum of squared deviations between the line and the actual data points.
least squares regression
The ratio of the value of a parameter estimate to the standard error of the parameter estimate.
t-statistic
