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Cross-price elasticity of demand
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The percentage change in quantity demanded of one good divided by the percentage change in the price of another good.
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Elastic Demand
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The case where the percentage change in the quantity demanded is greater than the percentage change in price, so the price elasticity is greater than 1 in absolute value.
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Elasticity
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A measure of how much one economic variable responds to changes in another economic variable.
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income elasticity of demand
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a measure of the responsiveness of the quantity demanded to changes in income, measured by the percentage change in the quantity demanded divided by the percentage change in income
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Inelastic Demand
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The case where the percentage change in quantity demanded is less than the percentage change in price, so the price elasticity is less than 1 in absolute value
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Perfectly Elastic demand
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he case where the quantity demanded is infinitely responsive to price and the price elasticity of demand equals infinity.
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Perfectly inelastic demand
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The case where the quantity demanded is completely unresponsive to price and the price elasticity of demand equals zero.
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price elasticity of demand
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The responsiveness of the quantity demanded to a change in price, measured by dividing the percentage change in the quantity demanded of a product by the percentage change in the product's price.
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price elasticity of supply
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the responsiveness of the quantity supplied to a change in price, measured by dividing the percentage change in the quantity supplied of a product by the percentage change in the product's price
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Total Revenue
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The total amount of funds a seller receives from selling of a good or service, calculated by multiplying price per unit by the number of units sold.
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unit elastic demand
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The case where the percentage change in quantity demanded is equal to the percentage change in price, so the price elasticity is equal to 1 in absolute value.
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Demand for gasoline is less price elastic in the short run than in the long run because in the long run
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consumers have more time to adjust.
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In general, when the price elasticity of demand is greater than 1 and a firm wants to increase total revenue, the firm should
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decrease prices
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Complement goods have a _____ cross-price elasticity of demand
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negative
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Perfectly inelastic supply will MOST likely occur in the very short run
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True
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Substitute goods have a absolute cross-price elasticity of demand
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false
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Perfectly inelastic
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vertical demand curve
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Perfectly elastic
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horizontal demand curve
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