jason d.

the magnitude of the elasticity of demand

depends on

closeness of substitutes

proportion of income spent on the good

time elapsed since a price change

percentage change in quantity demand

numerator of equation

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percentage change in price

denominator of equation

perfectly inelastic demand

demand with a price elasticity of zero

the quantity demanded remains constant when the price changes

ex insulin

unit elastic demand

demand with a price elasticity of one

the percentage change in the quantity demanded equals the percentage change in price

inelastic demand

the price elasticity equation equals 0-1

perfectly elastic demand

demand with an infinite price elasticity

quantity demand changes by an infinitely large percentage in response to a tiny price change

ex. dif priced sodas machines next to eachother

total revenue test

method of estimating the price elasticity of demand by observing the change in total revenue that results from a change in price

elasticity of demand

the responsiveness of the quantity demanded of a good to a change in its price, other things remain the same

cross elasticity of demand

measure of the responsiveness of the demand for a good to a change in the price of a substitute or compliment

income elasticity of demand

measure of the responsiveness of the demand for a good or service to a change in income

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elasticity of supply

the responsiveness of the quantity supplied to a change in the price of a good

magnitude of the elasticity of supply depends on?

resource substitution possibilities

time frame for the supply decision

individual demand

relationship between the price of a good and the quantity demanded by one person

market demand

relationship between the price of a good and the quantity demanded by all buyers

consumer surplus

value of a good minus the price paid for it, summed over the quantity bought

marginal cost

the cost of producing one more unit of a good or service

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