Chapter 5 Micro Test Flashcards Preview

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Flashcards in Chapter 5 Micro Test Deck (16):
1

Time Elapsed Since Price Change
What happens to consumer behavior during the long run and short run?

Longer the time the more sensitive consumers behavior is

Shorter the time the less sensitive consumer behavior is

2

Elasticity

Measures how much quantity demanded reacts to a change in price

3

Inelastic

When price changes demand SLIGHTLY changes

4

What is an example of 3 elastic products?

Newspaper
Porsche
Robert Graham-clothing

5

Elasticity Along a Linear Demand Curve

When people are more responsive at higher prices then lower prices

6

Proportion Income Spent

The more I spend on a product the more responsive I am

7

Cross Price Elasticity of Demand

How demand for one good changes when price of another good changes

8

What does unit of elastic mean

when quantity demanded and supply change at the same rate

9

Midpoint Method Formula

Quantity two - Quantity one
----------------------------------
(Quantity two + Quantity one) / 2

10

Elastic

When price changes demand changes GREATLY

11

Narrowness of Definition

The more specific the product the more elastic demand is

12

What are 2 examples of unit elastic

When something is equal to one
And when supply increases by 8 and demand decreases by 8

13

What are 3 examples of Inelastic products

Toothbrush
Water
Paper Towel

14

Income elasticity of demand

How much demand for a good changes when income changes

15

How do you determine if a good is elastic versus inelastic?

less than 1= inelastic
Greater than one= elastic

16

Elasticity Formula

Percentage change of quantity
-------------------------------
Percentage change of price

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