Eco Ch. 5
Luxury
has many substitutes
Necessity
has poor substitutes
Percentage change in Quantity Demanded
New Quantity- Initial Quantity / (New Quantity +Initial Quantity /2) X100
Income Elasticity of demand
Percentage change in quantity demanded /Percentage change in income
price elasticity of demand
Percentage change in quantity demanded /Percentage change in price
Cross Elasticity of Demand
Percentage change in quantity demanded of a good /Percentage change in price of one of its substitutes or complements
Price elasticity of supply
Percentage change in quantity supplied /Percentage change in price
Price Elasticity of Demand
The measure of the responsiveness of the quantity demanded of a good to a change in its price when all other influences on buyers plans remain the same
elastic
The more time that has elapsed since the price of a good changed, the more _____ is the demand for the good.
Perfectly Inelastic Demand
The percentage change in the quantity demanded is zero for any percentage change in price
Perfectly Elastic Demand
an almost zero percentage change in the price brings a very large percentage change in the quantity demanded
Midpoint Method
new price- initial price / (new price+ initial price /2) X100
Percentage Change in Price
new price- initial price / initial price X100
Income Elasticity of Demand
A measure of the responsiveness of the demand for a good to a change in income when other things remain the same.
Cross Elasticity of Demand
A measure of the responsiveness of the demand for a good to a change in the price of a substitute or complement when other things remain the same
Price Elasticity of Supply
A measure of the responsiveness of the quantity supplied of a good to a change in its price when all other influences on sellers plans remain the same.
Unit Elastic
If the price elasticity of demand or supply equals 1, demand is _______.
Elastic
If the price elasticity of demand or supply is greater than 1, demand is _______.
inelastic
If the price elasticity of demand or supply is less than 1, demand is _______.
Luxury
Is Elastic
necessity
Is inelastic
Inelastic
The demand for a broadly defined good is ______
Elastic
The demand for a narrowly defined good is _____.
Elastic
When the percentage change in the quantity demanded exceeds the percentage change in price, demand is _____.
inelastic
When the percentage change in the quantity demanded is less than the percentage change in price, demand is _____.
unit elastic
When the percentage change in the quantity equals the percentage change in price, demand is ______.