# Shared Flashcard Set

## Details

ECN 143:Notes:Day 8
ECN 143:Notes:Day 8
31
02/03/2016

Term
 Elasticity of Demand does what along a linear demand curve?
Definition
 Vary
Term
 What is Elasticity?
Definition
 Ratio of percentage changes of quantity demanded and quantity supplied.
Term
 What is Slope?
Definition
 Ratio of absolute changes of quantity demanded and quantity supplied.
Term
 What is the formula for Elasticity?
Definition
 ((Percentage Change of Quantity Demanded)/(Quantity Demanded))/((Percentage Change in Price)/(Price))
Term
 When prices are high, how large or small is the percentage change of quantity demanded and price?
Definition
 Percentage change in quantity demanded is large and percentage change in price is small.
Term
 When prices are low, how large or small is the percentage change of quantity demanded and price?
Definition
 Percentage change in quantity demanded is small and percentage change in price is large.
Term
 Why does Elasticity vary along a linear demand curve?
Definition
 Because it is based on percentage changes.
Term
 When prices are high Elasticity is what?
Definition
 Greater than one
Term
 When prices are low Elasticity is what?
Definition
 Less than one
Term
 Can Elasticity be determined algebraically?
Definition
 Yes
Term
 What is another way to represent the formula of Elasticity?
Definition
 ((Percentage in Quantity Demanded)/(Percentage Change in Price))*((Price)/(Quantity Demanded))
Term
 What is the algebraic formula for Elasticity?
Definition
 (Slope)*(Price/Quantity Demanded)
Term
 What is the algebraic formula of Elasticity really useful for?
Definition
 When examining the elasticity of a point on a demand curve.
Term
 What does a Demand Function Look Like?
Definition
 D:Q=A-BP
Term
 What does "Q" Mean in a Demand Function?
Definition
 Quantity Demanded
Term
 What does "A" Mean in a Demand Function?
Definition
 The amount people would take if it was free.
Term
 What does "P" Mean in a Demand Function?
Definition
 Price
Term
 What does "B" Mean in a Demand Function?
Definition
 Any number being multiplied by the price.
Term
 If you know the slope and you have the Demand Function, can you calculate Elasticity?
Definition
 Yes
Term
 Who is the tutor for ECN 143?
Definition
 Dale Tegantvort
Term
 What do you need for the test?
Definition
 A Calculator!
Term
 What is Substitutability?
Definition
 The availability of substitute goods.
Term
 What is the Effect of Substitutability on Elasticity?
Definition
 Where there are substitutes the more substitutes there are the greater the elasticity.
Term
 The more general a good the less what does it have?
Definition
 Substitutes
Term
 What are luxuries?
Definition
 Goods with very many substitutes
Term
 What are necessities?
Definition
 Goods with very few substitutes
Term
 What is Budget Share in relation to Elasticity?
Definition
 The greater the share of a budget a good takes up, the greater the Elasticity of said good.
Term
 What does Elasticity measure?
Definition
 The magnitude of a consumer's reaction to a price change.
Term
 The more opportunity (time) a consumer has to respond to a price change (find substitutes for the good) has what effect on elasticity?
Definition
 Elasticity Becomes Higher
Term
 If elasticity is smaller, then you are are more likely to get what?
Definition
 The good in question
Term
 If elasticity is larger, then you are are more likely to get what?
Definition
 A substitute good
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