Microeconomics Week 4 Flashcards
Measure of how much buyers and sellers respond to changes in market conditions
Elasticity
measures the degree of responsiveness of the quantity demanded of a commodity to change in its price
Price elasticity of demand
economic concept that measures the responsiveness in the quantity demanded of one good when the price for another good changes.
Cross elasticity of demand
is an economic measure of how responsive the quantity demanded for a good or service is to a change in income
Income elasticity of demand
Measurement of a market’s sensitivity to increases or decreases in advertising saturation
Advertising elasticity of demand
Responsiveness of producers in changing the price of their goods or services
Elasticity of supply
Any decrease in the product price would immediately cause the supply to shift to zero.
Perfectly Elastic Supply
When only one quantity of a good can be supplied at any give price
Perfectly Inelastic Supply
If a curve is more elastic, then small changes in price will cause large changes in quantity consumed
Highly Elastic Supply
If a curve is less elastic, then it will take large changes in price to effect a change in quantity consumed
Less Elastic Supply
Most significant factor as we have seen how elasticity increases with time
Time
The ease with which factors of production can be moved from one use to another will affect elasticity of supply
Factor Mobility
Nature would place restrictions upon supply
Natural constraints
the more willing entrepreneurs are to take risks, the greater will be the elasticity of supply
Risk Taking
Depends to a great extent on how costs change as output is varied
Costs
