# Chapter 5

The flashcards below were created by user Mingming on FreezingBlue Flashcards.

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
 Author: Mingming ID: 280445 Card Set: Chapter 5 Updated: 2014-08-10 06:02:53 Tags: Health Economics Folders: Health Economics Description: omg Show Answers: