Term
| Price Elasticity of Demand |
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Definition
| The ratio of the percentage change in quantity demanded of a product to the percentage change in its price; a measure of the responsiveness of buyers to a change in the price of a product. |
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Term
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Definition
| A method for calculating price elasticity of demand or price elasticity of supply that averages the two prices and two quantities as the reference points for computing percentages. |
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Term
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Definition
| Product or resource demand whose price elasticity is greater than 1. This means the resulting change in quantity demanded is greater than the percentage change in price. |
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Definition
| Product or resource demand for which the elasticity coefficient for price is less than 1. This means the resulting percentage change in quantity demanded is less than the percentage change in price. |
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Term
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Definition
| Demand or supply for which the elasticity coefficient is equal to 1; means that the percentage change in the quantity demanded or supplied is equal to the percentage change in price. |
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Term
| Perfectly Inelastic Demand |
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Definition
| Product or resource demand in which price can be of any amount at a particular quantity of the product or resource demanded; quantity demanded does not respond to a change in price; graphs as a vertical demand curve. |
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Definition
| Product or resource demand in which quantity demanded can be of any amount at a particular product price; graphs as a horizontal demand curve. |
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Definition
| The total number of dollars received by a firm from the sale of a product; equal to the total expenditures for the product produced by the firm; equal to the quantity sold multiplied by the price at which it was sold |
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Definition
| A test to determine elasticity of demand between any two prices: Demand is elastic if total revenue moves in the opposite direction from price; it is inelastic when it moves in the same direction as price; and it is of unitary elasticity when it doesn't change when price changes. |
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Term
| Price Elasticity of Supply |
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Definition
| The ratio of the percentage change in quantity supplied of a product or resource to the percentage change in its price; a measure of the responsiveness of producers to a change in the price of a product or resource. |
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Term
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Definition
| A period in which producers of a product are unable to change the quantity produced in response to a change in its price and in which there is a perfectly inelastic supply. |
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Term
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Definition
| A period of time in which producers are able to change the quantities of some but not all of the resources they employ; a period in which some resources are fixed and some are variable. |
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Definition
| A period of time long enough to enable producers of a product to change the quantities of all the resources they employ; period in which all resources and costs are variable and no resources or costs are fixed. |
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Term
| Cross Elasticity of Demand |
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Definition
| The ratio of the percentage of change in quantity demanded of one good to the percentage change in the price of some other good. A positive coefficient indicates the two products are substitute goods; a negative coefficient indicates they are complementary goods. |
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Term
| Income Elasticity of Demand |
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Definition
| The ratio of the percentage change in the quantity demanded of a good to a percentage change in consumer income; measures the responsiveness of consumer purchases to income changes. |
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Term
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Definition
| The difference between the maximum price a consumer is willing to pay for an additional unit of a product and its market price; the triangular area below the demand curve and above the market price. |
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Term
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Definition
| The difference between the actual price a producer receives and the minimum acceptable price; the triangular area above the supply curve and below the market price. |
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Term
| Efficiency Losses (or deadweight losses) |
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Definition
| Reductions in combined consumer and producer surplus caused by an underallocation or overallocation of resources to the production of a good or service. |
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