Flashcards
Elasticity
Cards in this deck (12)
- 1Percentage changenew value - old value DIVIDED by old value x 100
- 2Price elasticity of demandRefers to how much demand will change when there is a change in price
- 3Price elasticity of demand formula% change in quantity demanded DIVIDED by % change in price
- 4Price elasticity = 0Perfectly inelastic = no change in demand no matter what the price
- 5Between 0 - 1Inelastic - total revenue will fall
- 6Above 1Elastic - total revenue will rise if prices are lowered
- 7Income elasticity of demandRefers to how demand changes when there is a change in income
- 8Income elasticity of demand formula% change in quantity demanded DIVIDED by % change in income
- 9Cross price elasticity of demandExamines the demand for one product when the prices of another changes (subsitutes)
- 10Cross price elasticity of demand formula% change in quantity demanded for good A DIVIDED by % change in price of good B
- 11Price elasticity of supplyRefers to the responsiveness of supply to changes in the price level
- 12Price elasticity of supply formula% change in quantity supplied DIVIDED by % change in price