Elasticity

Descrição

Flashcards on the elasticity of economics for South African students. (Made with love by a South African ECON1016 student at Wits University in 2015)
BryanTurner
FlashCards por BryanTurner, atualizado more than 1 year ago
BryanTurner
Criado por BryanTurner mais de 9 anos atrás
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Resumo de Recurso

Questão Responda
What is elasticity? The measure of responsiveness with which the consumer changes their demand to a change in price or change in income. Percentage Change Formula: New Value - Old Value ÷ Old Value x 100
When is demand elastic? When the demand of elasticity is more negative than -1. There is a total change in quantity. (Quantity effect) Total spending decreases.
When is demand inelastic? When the demand of elasticity lies between than -1 and 0. There is a total change in price. (Price effect) Total spending increases.
When is demand unit elastic? When the demand of elasticity is -1. Total change in price = Total change in quantity.
Define the Price of Elasticity Demand How much the demand will change when there's a change in price. %∆ Demand ÷ %∆ Price
Define 'Income of Elasticity Demand' The change of quantity demanded when there are changes in income. The price of quantity price is kept constant. %∆ Demand ÷ %∆ Income
Define 'Cross-Price Elasticity of Demand' Measurement of the demand of a good when the price of a related good changes. %∆Quantity for Good A ÷ %∆Price for Good B
What is a substitute? Substitutes are alternatives (either other normal or inferior goods) to the main good. Cross-price elasticity of demand is positive.
What is a complement? Complements work together with the good, creating a higher demand for the good. Cross-price elasticity of demand is negative. (This could also mean it's an independent good)
Define Elasticity of Supply Response of quantity supplies to a 1 percent increase in the price of the good. %∆ Quantity Supplied ÷ %∆ Price

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