4.2 Elasticity of Demand flash cards

Set: 4.2 Elasticity of Demand

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All 2 terms

Term	Definition
Elasticity of Demand	Measures how responsive quantity demanded is to a price change; the percentage change in quantity demanded divided by the percentage change in price
Total Revenue	Price multiplied by the quantity demanded at that price

Set Information

Terms	2
Creator	mjdolenko
Created	October 11, 2009
Group	DRHS Economics
Subject	economics
Access	Anyone
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The demand curve can tell you how sensitive quantity demanded is to a change in price. The law of demand indicated that a lower price increases quantity demanded, but by how much? A firms success or failure depends on how much it knows about the demand for its product.

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mjdolenko : Something to remember the determinants of demand elasticity determine demand as well. They are availability of substitutes, shares of consumer's budget spent on the good (how much money do you have to spend on this), and time. Elasticity is a funny thing, be sure you understand the determinants and how they can affect demand.

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