Total Expenditure and Total Value Flashcards
What is total revenue
the amount paid by buyers and received by sellers of the good
how to calculate total revenue
price of good x quantity sold
does total revenue increase or decrease when price increases in an inelastic demand urve
revenue increases
does total revenue increase or decrease when price increases in an elastic demand curve
revenue decreases
how does revenue change in a unitary elasticity
revenue doesnt change
how to calculate income inelasticity of demand
% change in quantity / % change in income
how to calculate cross price elasticity of demand
% change in quantity A / % change in price B
how to calculate elasticity of supply
% change in quantity supplied / % change in price
what does income elasticity of demand measure
how much the quantity demanded of a good responds to the change in consumers’ income
what does price elasticity of demand measure
how much the quantity supplied of a good responds to a change in the price of that good (ie how flexible sellers are to a change in the amount of the good they produce)
does an increase in price of a perfectly inelastic supply lead to an increase or decrease in quantity supplied
quantity supplied remains unchanged
in general does a steeper curve mean more elastic or more inelastic
more inelastic
determinants of price elasticity of supply
availability of sellers to change the amount of the good they produce
time period
size of industry
ease of storing stock
mobility of factors of production
example of inelastic supply of goods
beach front land
example of elastic supply of goods
cars, manufactured goods
