M5 Flashcards
1
Q
how much buyers and sellers respond to changes in market
A
Elasticity
2
Q
is the percentage change in quantity demanded given
A
Price Elasticity of Demand
3
Q
calculating the price elasticity of demand
A
Midpoint Formula
4
Q
price elasticity of demand is less than one.
A
Inelastic Demand
5
Q
price elasticity of demand is greater than one.
A
Elastic Demand
6
Q
DETERMINANTS OF PRICE ELASTICITY OF DEMAND
A
- necessities versus luxuries
- availability of close substitutes
- definition of the market
- time horizon
7
Q
Demand tends to be more inelastic:
A
- if the good is a necessity
- time period is shorter
8
Q
Demand tends to be more elastic:
A
- if the good is a luxury
- the longer the time period
9
Q
amount paid by buyers
A
Total Revenue
10
Q
change in consumer’s income
A
Income Elasticity of Demand
11
Q
Types of Goods
A
Normal Goods
Inferior Goods
12
Q
income elasticity is positive.
A
Normal Goods
13
Q
income elasticity is negative.
A
Inferior Goods