Term
| Price Elasticity of Demand |
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Definition
| A measure of the responsiveness of the quantity demanded to changes in price; equal to the absolute value of the percentage change in quantity demanded divided by the percentage change in price |
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Term
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Definition
| The price elasticity of demand is greater than one, so the percentage change in quantity exceeds the percentage change in price |
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Term
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Definition
| The price elasticity of demand is less than one so the percentage change in quantity is less than the percentage change in price |
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Term
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Definition
| The price elasticity of demand is one, so the percentage change in quantity equals the percentage change in price |
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Term
| Perfectly inelastic Demand |
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Definition
| the price elasticity of demand is zero |
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Term
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Definition
| The price elasticity of demand is infinite |
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Term
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Definition
| The money a firm generates from selling its product |
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Term
| Income Elasticity of Demand |
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Definition
| A measure of the responsiveness of demand to changes in consumer income equal to the percentage change in the quantity demanded divided by the percentage change in income |
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Term
| Cross-Price elasticity of demand |
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Definition
| A measure of the responsiveness of demand to changes in the price of another good; equal to the percentage change in quantity demanded of one good (X) divided by the percentage change in the price of another good (Y) |
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Term
| Price elasticity of Supply |
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Definition
| A measure of the responsiveness of the quantity supplied to changes in price; equal to the percentage change in quantity supplied divided by the percentage change in price |
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Term
| Principle of Diminishing Returns |
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Definition
| Suppose output is produced with two or more inputs, and we increase one input while holding the other input or inputs fixed. Beyond some point-called the point of diminishing returns-output will increase at a decreasing rate |
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Term
| Perfectly Inelastic Supply |
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Definition
| The price elasticity of supply equals zero |
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Term
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Definition
| The price elasticity of supply is equal to infinity |
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