Chapter 20 - Elasticity: A Measure of Responsiveness

Short run

________ is when higher price encourages existing firms to increase their output by purchasing more materials and hiring more working.

Total revenue

________ is the money a firm generates from selling its product.

midpoint

At the ________ of a linear demand curve, demand is unit elastic.

Long run

________ is when new firms enter the market and existing firms expand their production facilities to produce more output.

excess demand

Highly elastic supply is if producers are very responsive to change in price, the increase in price caused by ________ will cause a large increase in the quantity supplied.

bumper crop

A(n) ________ is bad news for farmers whereas a bumper crop of soybeans brings good and bad news for farmers.

upper half

On the ________ of a linear demand curve, demand is elastic; on the lower half of the curve, demand is inelastic.

typical consumer

If a good represents a small part of the budget of the ________, demand is relatively inelastic.

price elasticity of supply

A perfectly inelastic is the ________ equals zero.

Antidrug policies

________ and property crime is when the government uses various policies to restrict the supply of illegal drugs, and the decrease in supply increases the equilibrium price.

Market versus Brand Elasticity

________ is the demand for a specific brand of a product is more elastic than the demand for the product.

total revenue

If the demand for the good is elastic there would be an increase in price which increases ________.

Perfectly inelastic demand

______________ is the price elasticity of demand is zero.

Perfectly elastic demand

____________is the price elasticity of demand is infinite.

Percentage change in equilibrium price

______________ = percentage change in demand/ Es + Ed

Elastic demand

______________ is the price elasticity of demand is greater than one, so the percentage change in quantity exceeds the percentage change.

Inelastic demand

_______________ is the price elasticity of demand is less than one, so the percentage change in quantity is less than the percentage change in price.

Unit elastic demand

_______________is the price elasticity of demand is one, so the percentage change in quantity equals the percentage change in price.

Perfectly inelastic

______________ demand is the price elasticity of demand is zero.

Perfectly elastic

__________________ demand is the price elasticity of demand is infinite.

Total revenue

_____________ = price per unit x quantity sold

Unit elastic demand

__________________, total revenue does not vary with price.

Brand Elasticity

Market versus _____________is the demand for a specific brand of a product is more elastic than the demand for the product.

Small decrease in supply

____________________ is if the shift of the supply curve is relatively small, the gap between the new supply and the old demand will be relatively small, and the small excess demand can be eliminated with a relatively increase in price.

Highly elastic demand

____________________ is if consumers are very responsive to changes in price, the increase in price caused by excess demand will cause a large reduction in the quantity demanded. As a result, the excess demand will be eliminated with a relatively small increase in price.

Highly elastic supply

__________________ is if producers are very responsive to change in price, the increase in price caused by excess demand will cause a large increase in the quantity supplied. As a result, the excess demand will be eliminated with a relatively small increase in price.