# Shared Flashcard Set

## Details

Ap econ chapter 6
n/a
15
Economics
10/16/2013

Term
 Price elasticity of demand
Definition
 the ratio of percent change in the quanitity demanded to the percent change in the price as we move along the demand curve (dropping minus sign)
Term
 midpoint method
Definition
 a technique for calculating the percent change in which changes in a variable are compared with the average or midpoint of the starting and final values
Term
 Perfectly inelastic demand
Definition
 the case in which the quanitity demanded does not respond at all to changes in the price; the demand curve is a vertical line
Term
 Perfectly elastic demand
Definition
 the case in which any price increase will cause the quanitity demanded to drop to zero; the demand curve is a horizontal line
Term
 unit-elastic demand
Definition
 the case in which the price elasticity of demand is excactly 1
Term
 elastic demand
Definition
 when the price elasticity of demand is greater than 1
Term
 inelastic demand
Definition
 when the price elasticity of demand is less than 1
Term
 total revenue
Definition
 the total value of sales of a good or service (the price of the good or service multiplied by the quanitity sold)
Term
 cross-price elasticity of demand
Definition
 a measure of the effect of the change in the price of one good on the quanitity demanded of the other; it is equal to the percent change in the quantity demanded of one good divided by the percent change in the price of another good
Term
 income elasticity of demand
Definition
 the precent change in the quantity of a good demanded when a consumer's income changes divided by the percent change in the consumer's income
Term
 income-elastic demand
Definition
 when the income elasticity of demand for a good is greater than 1
Term
 income-inelastic demand
Definition
 when the income elasticity of demand for a good is positive but less than 1
Term
 price elasticity of supply
Definition
 a measure of the responsiveness of the quanitity of a good supllied to the price of that good; the ratio of the percent change in the quanitity supplied to the percent change in the price as we move along the suply curve
Term
 perfectly inelastic supply
Definition
 the case in which the price elasticity of supply is zero, so that changes in the price of the good have no effect on the quanitity supplied; the perfectly inelastic supply curve is a vertical line
Term
 perfectly elastic supply
Definition
 the case in which even a tiny increase or reduction in the price will lead to a very large changes in the quantity supplied, so that the price elasticity of supply is infinite; the perfectly elastic supply curve is a horizontal line
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