ECON LESSON 1 MID Flashcards
is a measure of the
responsiveness of quantity demanded to changes in price.
Price elasticity of demand
Formula for coefficient of price elasticity of demand
Ed = Percentage in quantity demanded/ Percentage change in price
Quantity demanded changes proportionately more than price changes. OR Ed 1>
Elastic
Quantity demanded changes proportionately less than price changes OR Ed 1<
Inelastic
Quantity demanded changes proportionately to price changes OR Ed 1=
Unit elastic
Quantity demanded extremely responsive to even every small changes
Perfectly elastic
Quantity demanded does not change as prices change
Perfectly Inelastic
a seller is equal to the price of a good times the quantity of the
good sold.
Total revenue
The elasticity of demand is not same the relationship between
Price and quantity and so will also have implications for
revenue. T OR F
FALSE (SAME)
In law of supply and demand, price is inversely
proportional to quantity demanded. (downward slope)
T OR F?
TRUE
Price and total revenue are inversely related
Elastic Demand and Total Revenue
Price and total revenue are directly related
Inelastic Demand and Total Revenue
A rise or fall in price will leave total revenue
unchanged.
Unit Elastic Demand and Total Revenue
is a measure of the responsiveness
of quantity supplied to changes in price.
Price elasticity of supply
Formula for coefficient of price elasticity of supply
Percentage in quantity supplied/Percentage change in price
Toothpicks are Inelastic. T or F?
FALSE ( ELASTIC)
Determinants of Elasticity of Supply
- Change in Per-unit Costs with Increased
Production - Time Horizon
- Share of Market Inputs
- Geographic Scope
Immediately following a price increase producers can expand out their output using their current supply
Time Horizon
Supply is more Inelastic when the industry is a small demander in its
input markets because supply can be expanded without causing a big increase in the demand for the industry’s inputs. TRUE OR FALSE?
FALSE (INELASTIC)
The narrow the scope of the market of a good,
the more elastic its supply.
Geographic Scope
Supply is inelastic when the industry is a big demander in its input
markets. T OR F
TRUE
refers to a percentage change in quantity
supplied that is greater than the percentage change in price.
Elastic supply
refers to a percentage change in
quantity supplied that is less than the percentage change in price.
Inelastic supply
refers to a percentage change in
quantity supplied that is equal to the percentage change in price.
Unit Elastic supply
a small change in price changes
the quantity supplied by an infinitely large amount
Perfectly Elastic supply
a change in price brings no
change in quantity supplied
Perfectly inelastic supply
Revenue rise as Price rises if
Demand is Inelastic. TRUE OR FALSE
TRUE
