Key Terms

Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.

Question

Price elasticity of demand
Midpoint method
Perfectly inelastic demand
Elastic demand
Inelastic demand
Unit-elastic demand
Total revenue
Cross-price elasticity of demand
Income elasticity of demand
Income-elastic demand
Income-inelastic demand
Price elasticity of supply
Perfectly inelastic supply
Perfectly elastic supply
Excise tax
Tax rate
Administrative costs
the case in which even a tiny increase or reduction in the price will lead to very large changes in the quantity supplied, so that the price elasticity of supply is infinite; the perfectly elastic supply curve is a horizontal line
when the price elasticity of demand is less than 1
a measure of the effect of the change in the price of one good on the quantity demanded of the other; it is equal to the percent change in the quantity demanded of one good divided by the percent change in the price of another good
a tax on sales of a good or service
a measure of the responsiveness of the quantity of a good supplied to the price of that good; the ratio of the percent change in the quantity supplied to the percent change in the price as we move along the supply curve.
the amount of tax people are required to pay per unit of whatever is being taxed
when the income elasticity of demand for a good is greater than 1
when the price elasticity of demand is greater than 1
(of a tax) the resources used by government to collect the tax, and by taxpayers to pay it, over and above the amount of the tax, as well as to evade it
when the income elasticity of demand for a good is positive but less than 1
the case in which the quantity demanded does not respond at all to changes in the price; the demand curve is a vertical line
the case in which the price elasticity of demand is exactly 1
the ratio of the percent change in the quantity demanded to the percent change in the price as we move along the demand curve (dropping the minus sign)
the case in which the price elasticity of supply is zero, so that changes in the price of the good have no effect on the quantity supplied; the perfectly inelastic supply curve is a vertical line
a technique for calculating the percent change in which changes in a variable are compared with the average, or midpoint, of the starting and final values
the total value of sales of a good or service. It is equal to the price multiplied by the quantity sold
the percent change in the quantity of a good demanded when a consumer’s income changes divided by the percent change in the consumer’s income

Price elasticity of demand, p. 144

Midpoint method, p. 146

Perfectly inelastic demand, p. 148

Perfectly elastic demand, p. 148

Elastic demand, p. 149

Inelastic demand, p. 149

Unit-elastic demand, p. 149

Total revenue, p. 150

Cross-price elasticity of demand, p. 155

Income elasticity of demand, p. 156

Income-elastic demand, p. 157

Income-inelastic demand, p. 158

Price elasticity of supply, p. 159

Perfectly inelastic supply, p. 159

Perfectly elastic supply, p. 159

Excise tax, p. 162

Tax rate, p. 164

Administrative costs, p. 168