question
determinant of Own Price Elasticity
answer
Presence (or absence) of substitutes
question
determinant of Own Price Elasticity
answer
% of income spent on the good
question
determinant of Own Price Elasticity
answer
Time
question
Own Price Elasticity
answer
% increase in quantity demanded that occurs as a result of a 1% reduction in price, ceteris paribus
question
Marshall Time Period 1
answer
Momentary run (very short), all factors of production are fixed
question
Marshall Time Period 2
answer
Short run, some factors of production are fixed, some variable
question
Marshall Time Period 3
answer
Long run, all factors of production are variable, adjustments possible
question
Elastic demand curve
answer
Flatter, change in price leads to larger change in quantity demanded
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Inelastic demand curve
answer
Steeper, change in price leads to a smaller change in quantity demanded
question
Producer tax incidence
answer
happens when a good is relatively elastic
question
Consumer tax incidence
answer
happens when a good is relatively inelastic
question
Elasticity formula
answer
% change in quantity / % change in price
question
Own Price Elasticity formula
answer
(Q1-Q2)/.5(Q1+Q2) / (P1-P2)/.5(P1+P2)
question
Elastic
answer
if own price elasticity absolute value is >1
question
Inelastic
answer
if own price elasticity absolute value is <1
question
Unitary elastic
answer
if own price elasticity absolute value =1
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