# ECON SET 2

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

• P(+)  -  Q(-)
• P(-)   -  Q(+)
2. P2-P2/P1
Q2-Q1/Q1
3. computes the percentage change by dividing the change by the midpoint of the initial and final levels
• midpoint methods
• (Q2-Q1)/[Q2+Q1/2]
• -----------------------
• (P2-P1)/[P2+P1/2]
4. The flatter the curve the greater the
Elasticity
5. The steeper the curve the smaller
the elasticity
6. change in Q/Q
----------------
change in P/P
• DeltaQ            P
• -------- X       ----
• DeltaP             Q
7. 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 cross-price elasticity of demand
elasticity
8. 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
9. 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
10. 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 cross-price elasticity of demand price elasticity of supply
income elasticity of demand
11. 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
cross-price elasticity of demand
12. 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
13. a legal maximum on the price at which a good can be sold
price ceiling
14. a legal minimum on the price at which a good can be sold
price floor
15. the manner in which the burden of a tax is shared among participants in a market
tax incidence
16. the study of how the allocation of resources affects economic well-being
welfare economics
17. the maximum amount that a buyer will pay for a good
willingness to pay
18. the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it
consumer surplus
19. the value of everything a seller must give up to produce a good
cost
20. the amount a seller is paid for a good minus the seller’s cost of providing it efficiency equality
producer surplus

## Card Set Information

 Author: aminime ID: 335232 Filename: ECON SET 2 Updated: 2017-11-13 04:51:19 Tags: economics Folders: economics Description: ECON SET 2 Show Answers:

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