Term
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Definition
| A measure of how much one economic variable responds to changes in another economic variable. |
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Term
| Price elasticity of demand |
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Definition
| The responsiveness of the quantity demanded to a change in price, measured by dividing the percentage change in the quantity demanded of a product by the percentage change in the products price. |
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Term
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Definition
| Demand is elastic when the percentage change in quantity demanded is greater than the percentage change in price, so the price elasticity is greater than 1 in absolute value. |
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Term
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Definition
| Demand is inelastic when the percentage change in quantity demanded is less than the percentage change in price, so the price elasticity is less that 1 in absolute value. |
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Term
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Definition
| Demand is unit-elastic when the percentage change in quantity demanded is equal to the percentage change in price, so the price elasticity is equal to 1 in absolute value. |
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Term
| Perfectly inelastic demand |
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Definition
| The case where the quantity demanded is completely unresponsive to price, and the price elasticity of demand equals zero. |
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Term
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Definition
| The case where the quantity demanded is infinitely responsive to price, and the price elasticity of demand equals infinity. |
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Term
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Definition
| The total amount of funds received by a seller of a good or service, calculated by multiplying price per units sold. |
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Term
| Cross-elasticity of demand |
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Definition
| The percentage change in quantity demanded of one good divided by the percentage change in the price of another good. |
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Term
| Income elasticity of demand |
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Definition
| A measure of the responsiveness of quantity demanded to changes in income, measured by the percentage change in quantity demanded divided by the percentage change in income. |
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Term
| Price elasticity of supply |
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Definition
| The responsiveness of the quantity supplied to a change in price, measured by dividing the percentage change in the quantity supplied of a product by the percentage change in the product's price. |
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