Microeconomics Ch. 6

  1. Price Elasticity of Demand
    The responsiveness of the Quantity demanded to change in its own price.

    Ed = % ΔQd/ % ΔP
  2. Price Elasticity
    |% ΔQd/ % ΔP|
  3. Elastic Demand
    • lots of substitutes and very responsive to price change
    • |Ed|>1
  4. Inelastic Demand
    • limited substitutes
    • |Ed|<1
  5. Inelastic demand between two prices
    price and TR are directly related.
  6. Elastic between two prices
    the price and TR are indirectly related.
  7. Cross-Price Elasticity of Demand
    Ec=% ΔQda / % ΔPb
  8. Income Elasticity of Demand
    Ey=% ΔQd / % ΔY
  9. Price Elasticity of Supply
    Es=% ΔQs / % ΔP
  10. Perfectly Elastic
    horizontal Demand Curve
  11. Perfectly Inelastic
    Vertical Demand Curve (no matter what price the Qd does not change)
Card Set
Microeconomics Ch. 6
equations and definitions