Chapter 5

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Author:
Mingming
ID:
280445
Filename:
Chapter 5
Updated:
2014-08-10 02:02:53
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Health Economics
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Health Economics
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  1. the percentage change in one variable in relation to the percentage change in another variale
    Elasticity
  2. measures the percentage change in quantity with respect to the percentage change in price
    Price Elasticity
  3. Categories of price elasticity
    • Price elasticity of demand
    • Price elasticity of supply
  4. measures the response of quantity demanded with respect to its price
    Price elasticity of demand
  5. measures the responsiveness of quantity supplied in response to the percentage change in the price of goods and services
    Price elasticity of supply
  6. Two ways of calculating the price elasticity of demand
    • Point elasticity
    • Arc elasticity
  7. measures the elasticity at a particular point
    Point elasticity
  8. Measures the elasticity between two points
    Arc elasticity
  9. Categories of price elasticity of demand
    • price elastic demand
    • price inelastic demand
    • unitary elastic demand
    • perfectly elastic demand
    • perfectly inelastic demand
  10. the value of price elasticity coefficient is greater than one
    price elastic demand
  11. the value of price elasticity coefficient is less than one
    price inelastic demand
  12. elasticity coefficient is equal to one
    unitary elastic demand
  13. coefficient equals infinity
    perfectly elastic demand
  14. elasticity coefficient equals zero
    perfectly inelastic demand
  15. Determinants of price elasticity of demand
    • Importance or degree of necessity of the goods or services
    • Number of available substitute
    • The proportion of income in price changes
    • The time period
  16. Categories of price elasticity of supply
    • Price elastic supply
    • price inelastic supply
    • unitary elastic supply
    • perfectly elastic supply
    • perfectly inelastic supply
  17. change in price leads to a greater change in quantity supplied
    price elastic supply
  18. a change in price leads to a lesser change in quantity supplied
    price inelastic supply
  19. change in price leads to an equal change in quantity supplied
    unitary elastic supply
  20. occurs when there is no change in price and there is an infinite change in quantity supplied
    perfectly elastic supply
  21. occurs when a change in price has no effect on quantity supplied
    perfectly inelastic supply
  22. primary determinant of price elasticity of supply
    Time period
  23. Classification of time period
    • Monetary or intermediate
    • Short-run
    • Long-run
  24. the responsiveness of quantity demanded in response to a change in income
    income elasticity of demand
  25. income elasticity is positive
    normal good
  26. income elasticity is negative
    inferior good
  27. normal goods with income elasticity is greater than one
    luxury goods
  28. measures the responsiveness of quantity demanded of a certain goods or service to a change in price of another good or service
    cross elasticity of demand
  29. measures whether the good is a substitute or a complementary
    Cross elasticity of demand
  30. goods that are used in conjunction with other goods
    Complementary goods
  31. goods that can be used in place of another
    Substitute goods

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