Microeconomics Ch. 6
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Price Elasticity of Demand
The responsiveness of the Quantity demanded to change in its own price.
Ed = % ΔQd/ % ΔP
|% ΔQd/ % ΔP|
- lots of substitutes and very responsive to price change
- limited substitutes
Inelastic demand between two prices
price and TR are directly related.
Elastic between two prices
the price and TR are indirectly related.
Cross-Price Elasticity of Demand
Ec=% ΔQda / % ΔPb
Income Elasticity of Demand
Ey=% ΔQd / % ΔY
Price Elasticity of Supply
Es=% ΔQs / % ΔP
horizontal Demand Curve
Vertical Demand Curve (no matter what price the Qd does not change)
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