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Economics 3rd Semester > ELASTICITY OF DEMAND AND SUPPLY > Flashcards

ELASTICITY OF DEMAND AND SUPPLY Flashcards

1
Q

this degree of response to a change is called

A

Elasticity

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2
Q

goods differ on how demand and supply respond to changes in their determinants.

A

ELASTICITY OF DEMAND AND SUPPLY

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3
Q

it is a measure of how much buyers and sellers respond to changes in market conditions.

A

ELASTICITY

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4
Q

the coefficient of elasticity is obtained when the
percentage change in demand is divided by the percentage change in determinant.

A

ELASTICITY

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5
Q

DEGREES OF ELASTICITY

A

Elastic
Inelastic
Unitary elastic

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6
Q

the absolute value of the coefficient of elasticity is greater than

A

ELASTIC

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7
Q

a change in determinant will lead to a greater change in demand or supply.

A

ELASTIC

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8
Q

the absolute value of the coefficient of elasticity in less than 1.

A

Inelastic

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9
Q

a change in determinant will lead to lesser change in demand or supply.

A

Inelastic

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10
Q

the absolute value of the coefficient of elasticity is equal to 1.

A

Unitary elastic

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11
Q

a change in determinant will lead to an equal change in demand or supply.

A

Unitary elastic

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12
Q

3 TYPES OF ELASTICITY OF DEMAND

A
  1. price elasticity
  2. income elasticity
  3. cross price elasticity (price of related goods - substitute or complement)
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13
Q

it measures the responsiveness of demand to a change in the price of the good

A

PRICE ELASTICITY OF DEMAND

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14
Q

TWO WAYS TO MEASURE PRICE ELASTICITY OF DEMAND

A

ARC ELASTICITY
POINT ELASTICITY

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15
Q

price elasticity is important to the seller since it gauges how far demand can change relative to price.

A

POINT ELASTICITY

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16
Q

measures the degree of elasticity on a single point on the demand curve.

A

POINT ELASTICITY

17
Q

the value of elasticity is computed by choosing two points on the demand curve and comparing the percentage change in the quantity and the price of those two points.

A

ARC ELASTICITY

18
Q

goods bought when income increases

A

NORMAL GOOD

19
Q

goods bought when income decreases

A

INFERIOR GOOD

20
Q

this measures how quantity demanded changes as the prices of a related good (substitute or complement good) changes.

A

CROSS PRICE ELASTICITY OF DEMAND

21
Q

a measure of the sensitivity of (quantity) supplied goods or services to a change in the price of that good or service.

A

ELASTICITY OF SUPPLY

Economics 3rd Semester (6 decks)

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