| Term | Definition |
|---|
| perfectly elastic demand | demand with an infinite price elasticity; the quantity demanded changes by an infinitely large percentage in response to a tiny price change; horizontal line |
| perfectly inelastic demand | demand with a price elasticity of zero; the quantity demanded remains constant when the price changes; vertical line |
| inelastic demand | a demand with a price elasticity between 0 and 1; the percentage change in the quantity demanded is less than the percentage change in price |
| unit elastic demand | demand with a price elasticity of 1; the percentage change in the quantity demanded equals the percentage change in price |
| elastic demand | demand with a price elasticity greater than 1; the percentage change in the quantity demanded exceeds the percentage change in price |
| cross elasticity of demand | the responsiveness of the demand for a good to a change in the price of a substitute or complement; percentage change in the quantity demanded of the good divided by the percentage change in the price of the substitute or complement |
| substitute | a good with a positive cross elasticity of demand with respect to another good |
| complement | a good with a negative cross elasticity of demand with respect to another good |
| income elasticity of demand | the responsiveness of demand to a change in income; percentage change in the quantity demanded divided by percentage change in income |
| income elastic normal good | when the percentage of income spent on a good increases as income increases |
| income inelastic normal good | when the percentage of income spent on a good decreases as income increases |
| inferior good | when the quantity demanded of a good and the amount spent on it decrease when income increases |
Combine with other sets
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