Term
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Definition
| a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants |
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Term
| price elasticity of demand |
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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 |
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Term
| What determines the price elasticity of demand? |
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Definition
| availability of close substitutes, necessities versus luxuries (necessities tend to have inelastic demands whereas luxuries have elastic demands), definition of the market (narrowly defined markets tend to have a more elastic demand than broadly defined markets i.e. food and ice cream), and time horizon (goods tend to have more elastic demand over longer time horizons) |
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Term
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Definition
| the amount paid by buyers and received by sellers of a good computed as the price of the good times the quantity sold |
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