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EP= %Change in Quant/%Change in Price
Absolute Value because of the Law of Demand


computes the percentage change by dividing the change by the midpoint of the initial and final levels
 midpoint methods
 (Q2Q1)/[Q2+Q1/2]
 
 (P2P1)/[P2+P1/2]

The flatter the curve the greater the
Elasticity

The steeper the curve the smaller
the elasticity

change in Q/Q

change in P/P
 DeltaQ P
  X 
 DeltaP Q

a measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants price elasticity of demand total revenue income elasticity of demand crossprice elasticity of demand
elasticity

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
price elasticity of demand

the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold
total revenue

a measure of how much the quantity demanded of a good responds to a change in consumers’ income, computed as the percentage change in quantity demanded divided by the percentage change in income crossprice elasticity of demand price elasticity of supply
income elasticity of demand

a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in price of the second good
crossprice elasticity of demand

a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price
price elasticity of supply

a legal maximum on the price at which a good can be sold
price ceiling

a legal minimum on the price at which a good can be sold
price floor

the manner in which the burden of a tax is shared among participants in a market
tax incidence

the study of how the allocation of resources affects economic wellbeing
welfare economics

the maximum amount that a buyer will pay for a good
willingness to pay

the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it
consumer surplus

the value of everything a seller must give up to produce a good
cost

the amount a seller is paid for a good minus the seller’s cost of providing it efficiency equality
producer surplus

