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elasticity
a measure of the responsiveness of economic actors to changes in conditions
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price-inelastic demand
a relatioship between price and quantity characterized by relatively weak responses of buyers to price changes. in this case, revenues to the seller change directly with the price
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price-elastic demand
a relationship between price and quantity characterized by relatively strong responses of buyers to price changes. In this case, revenues to the seller change inversely with the price
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price inelastic demand curve
a demand curve that is vertical, which means that quantity demanded does not respond at all price
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perfectly elastic demand curve
demand curve that is horizontal, which means that quantity demanded is extremely sensitive to price
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price taker
a seller that faces perfectly elastic demand for its good
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price elastic of supply
a measure of the responsiveness of quantity supplied to changes in price
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normal goods
goods for which demand rises when ability to payrises, and falls when ability to pay falls
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inferior goods
goods for which demand falls when ability to pay rises,and rises when ability to pay falls
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income elasticity of demand
a measure of the responsiveness of quantity demanded to changes in income
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income effect of a price change
the tendency of a price increase to reduce the quantity demanded of nomral goods (and to increase the quantity demanded of any inferior goods)
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substitution effect of a price change
the tendency of a price increase for a particular goods to reduce that quantity demanded of that, as buyers turn to cheaper substitues
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short run elasticity
a measure of the relatively immediate responsiveness to a price change
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long run elasticity
a measure of the response to a price change after economic actors have had time to make adjustment
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