Flashcards
Elasticity
Flashcards do conjunto (7)
- 1what does elasticity mean?whenever a change in one variable causes a change to occur in a second variable, an elasticity can be calculated
- 2What does elasticity measure?elasticity measures the proportionate response or change in a second variable following an initial change in a first variable.
For example, if a 5% increase in price were to cause firms to increase supply more than proportionately (10%), supply would be elastic. If the response were less proportionate (e.g. an increase in supply by 3%), supply would be inelastic - 3what is the formula for price elasticity of demand?proportionate change in quantity demanded / proportionate change in price
- 4What is the formula for income elasticity of demand?proportionate change in quantity demanded / proportionate change in income
- 5what is the formula for cross elasticity of demand?proportionate change in quantity of A demanded / proportionate change in price of B
- 6what is the formula for price elasticity of supply?proportionate change in quantity supplied / proportionate change in price
- 7what are the determinants of price elasticity of supply?1. length of production period
2. existence of spare capacity
3. ease of accumulating stocks
4. ease of factor submission
5. number of firms in the market
6. time
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- FlashCards sobre Elasticity, criado por georgiabright4 em 30-03-2015.
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- georgiabright4
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