Chapter 5: Elasticity

________ (TR) is the amount of money earned when a supplier sells a given quantity of a good and it is equal to the price of the good multiplied by the quantity of the good sold.

Using ________ also allows us to compare responses across goods that are measured in different units.

When demand is perfectly inelastic, at each of the ________ quantity demanded is constant and unchanging.

The ________ is the percent change in quantity demanded divided by the percentage change in price.

________ is a measure of responsiveness between any two variables.

When demand is inelastic, the absolute value of the ________ is less than 1 because the numerator of E will be smaller than the denominator of E.

When demand is elastic, a decrease in price causes an increase in ________, while an increase in price causes a decrease in ________.

When demand is elastic, the absolute value of the numerator of the ________ will be greater than the absolute value of the denominator of the ________.

elastic demand and inelastic demand

perfectly inelastic demand, perfectly elastic demand, and unit elastic demand

the extreme subcategory of inelastic demand that describes the situation where quantity demanded does not change in response to a price change.

the extreme subcategory of elastic demand that describes the situation where quantity demanded changes by an infinite amount in response to a price change.

when a given percent change in the price of a good causes an equal size percent change in the quantity of the good demanded.

1)The Availability of Substitutes

2)Luxury versus Necessity Goods

3)The length of Time Available to Adjust to a Price Change

4)The Portion of Income Spent on the Good

when a given percent change in the price of a good causes a larger percent change in the quantity demanded of the good.

when a given percent change in the price of a good causes a smaller percent change in the quantity demanded of the good.