Substitution effect Income effect Price elasticity of demand Midpoint method Perfectly inelastic demand Perfectly elastic demand Elastic demand Inelastic demand Unit- Total revenue Cross- Income elasticity of demand Income- Income- Price elasticity of supply Perfectly inelastic supply Perfectly elastic supply | the case in which the income elasticity of demand for a good is positive but 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. the case in which any price increase will cause the quantity demanded to drop to zero; the demand curve is a horizontal line. the case in which the income elasticity of demand for a good is greater than 1. the change in the quantity of a good consumed that results from the change in a consumer’s purchasing power due to the change in the price of the good. 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 case in which the price elasticity of demand is exactly 1. the case in which the price elasticity of demand is less than 1. the total value of sales of a good or service (the price of the good or service multiplied by the quantity sold). the change in the quantity of a good demanded as the consumer substitutes the good that has become relatively cheaper for the good that has become relatively more expensive. 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 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. 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 greater than 1. 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. |
Substitution effect
Income effect
Price elasticity of demand
Midpoint method
Perfectly inelastic demand
Perfectly elastic demand
Elastic demand
Inelastic demand
Unit-
Total revenue
Cross-
Income elasticity of demand
Income-
Income-
Price elasticity of supply
Perfectly inelastic supply
Perfectly elastic supply