ch 5.txt

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markdoronio
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93197
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ch 5.txt
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2011-07-06 20:57:08
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  1. revenue
    price x quantity
  2. elasticity
    a measure of the responsiveness of economic actors to changes in conditions
  3. price-inelastic demand
    a relatioship between price and quantity characterized by relatively weak responses of buyers to price changes. in this case, revenues to the seller change directly with the price
  4. price-elastic demand
    a relationship between price and quantity characterized by relatively strong responses of buyers to price changes. In this case, revenues to the seller change inversely with the price
  5. price inelastic demand curve
    a demand curve that is vertical, which means that quantity demanded does not respond at all price
  6. perfectly elastic demand curve
    demand curve that is horizontal, which means that quantity demanded is extremely sensitive to price
  7. price taker
    a seller that faces perfectly elastic demand for its good
  8. price elastic of supply
    a measure of the responsiveness of quantity supplied to changes in price
  9. normal goods
    goods for which demand rises when ability to payrises, and falls when ability to pay falls
  10. inferior goods
    goods for which demand falls when ability to pay rises,and rises when ability to pay falls
  11. income elasticity of demand
    a measure of the responsiveness of quantity demanded to changes in income
  12. income effect of a price change
    the tendency of a price increase to reduce the quantity demanded of nomral goods (and to increase the quantity demanded of any inferior goods)
  13. substitution effect of a price change
    the tendency of a price increase for a particular goods to reduce that quantity demanded of that, as buyers turn to cheaper substitues
  14. short run elasticity
    a measure of the relatively immediate responsiveness to a price change
  15. long run elasticity
    a measure of the response to a price change after economic actors have had time to make adjustment

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