Eco Ch. 5

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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 ______.


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