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ECN 143:Notes:Day 7
ECN 143:Notes:Day 7
30
Business
Undergraduate 1
02/01/2016

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Term
 What direction do Supply Curves Move in?
Definition
 Diagonally Up and to the Right
Term
 What direction do Demand Curves Move in?
Definition
 Diagonally Down and to the Right
Term
 When is our first class test?
Definition
 Next Wednesday
Term
 What kind of relationship do price and quantity demanded have?
Definition
 Inverse
Term
 What kind of relationship do price and quantity supplied have?
Definition
 Direct
Term
 What is Price Elasticity of Demand?
Definition
 Measurement of buyers’ responsiveness to a price change.
Term
 What does Percent of Change of Quantity Demanded Divided by Percent of Change in Price Equal?
Definition
 The Elasticity of Demand aka the price elasticity of demand for the Good.
Term
 If p0=original price, p1=new price, q0=original quantity demanded, and q1=new quantity demanded, then what is the formula for the elasticity of quantity demanded?
Definition
 ((q1-q0)/q0)/((p1-p0)/p0)=The Elasticity of Demand aka the price elasticity of demand for the Good.
Term
 Is Elasticity of Demand a ratio of percentage changes or absolute changes?
Definition
 A ratio of percentage changes.
Term
 Is Slope of a ratio of percentage changes or absolute changes?
Definition
 A ratio of absolute changes.
Term
 Is Elasticity sensitive to monetary units?
Definition
 No.
Term
 Let’s say p0=\$3, p1=\$2, q0=60lbs, q1=100lbs, then how do you calculate its elasticity of demand?
Definition
 ((100-60)/60)/((2-3)/3)=((⅔)/(-⅓)=(⅔)(-3)=-2
Term
 When Elasticity of Demand is Greater than One, then Demand is what?
Definition
 Elastic
Term
 When Elasticity of Demand is Less than One, then Demand is what?
Definition
 Inelastic
Term
 When Elasticity of Demand is Equal to One, then Demand is what?
Definition
 Unit Elastic
Term
 For Elasticity of Demand to be greater than one, then the numerator must be what?
Definition
 Greater than the denominator.
Term
 For Elasticity of Demand to be less than one, then the numerator must be what?
Definition
 Less than the denominator.
Term
 For Elasticity of Demand to be equal to one, then the numerator must be what?
Definition
 Equal to the denominator.
Term
 What does midpoint formula do?
Definition
 Takes the average elasticity between any two points along a demand function.
Term
 What is the midpoint formula?
Definition
 ((Change in Quantity)/((q0+q+1)/2))/((Change in Price)/((p0+p1)/2))
Term
 What does (Ed^m) represent?
Definition
 Elasticity of Demand found through midpoint formula.
Term
 How do you know if slope is constant?
Definition
 Price changes the same number of intervals (ex.price goes decreases by 2 as quantity demanded increases by 2) in either direction as quantity demanded, consistently throughout your stream of data.
Term
 Your revenue does not increase forever if you just continually do what?
Definition
 Decrease the price
Term
 What is the solution to a problem in this form?(a/b)/(a/c)
Definition
 1.)Multiply the numerator by the flipped denominator.(a/b)*(c/a)---2.)The a's cancel out and the two fractions merge.(c/b)---
Term
 What is total revenue?
Definition
 Quantity of Goods Sold Times Price of Goods Sold.
Term
 What does elastic demand represent?
Definition
 Percent Change in Quantity Demanded is significantly higher than Percent Change in Price.
Term
 What does unit elastic demand represent?
Definition
 The change in percent of price and the change in percent of quantity demanded is equal.
Term
 When demand is elastic, what happens to Total Revenue?
Definition
 It increases.
Term
 When demand is unit elastic, what happens to Total Revenue?
Definition
 It does not change.
Term
 When demand is inelastic what happens to total revenue?
Definition
 It decreases.
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