# Shared Flashcard Set

## Details

Principles of Microeconomics- Chp. 5
06E:001 U of Iowa Book: Principles of Microeconomics 4th Edition By: N. Gregory Mankiw
11
Economics
02/16/2011

Term
 Elasticity
Definition
 a measure of the responsiveness of quantity demanded of quantity supplied to one of its determinants
Term
 Price Elasticity of Demand
Definition
 a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price
Term
 Elastic
Definition
 if the quantity demanded or quantity supplied responds substantially to changes in the price; when the elasticity is greater than one, so that quantity moves proportionately more than the price
Term
 Inelastic
Definition
 if the quantity demanded or quantity supplied responds only slightly to changes in price; when the elasticity is less than one, so that quantity moves proportionately less than the price
Term
 Unit Elasticity
Definition
 when elasticity is exactly one, so that quantity moves the same amount proportionately as price
Term
 Perfectly Inelastic
Definition
 regardless of the price, the quantity demanded/supplied stays the same
Term
 Perfectly Elastic
Definition
 very small changes in the price lead to huge changes in the quantity demanded/supplied
Term
 Total Revenue
Definition
 the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold (Inelastic: increase in price=increase in revenue) (Elastic: increase in price=decrease in revenue)
Term
 Income Elasticity of Demand
Definition
 a measure of how much the quantity demanded of a good responds to a change in consumers' income, computed as the percentage change in quantity demanded divided by the percentage change in income
Term
 Cross-Price Elasticity of Demand
Definition
 a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good
Term
 Price Elasticity of Supply
Definition
 a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divded by the pecentage change in price
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