Intro to Economics Ch.3
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15 terms
Terms | Definitions |
|---|---|
 Price Elasticity of Demand | responsiveness of quantity demanded to changes in price |
| > 1 | elastic; very responsive |
| < 1 | inelastic; not very responsive |
| =1 | unit elastic; proportionate |
| Elasticity 1) | time |
| Elasticity 2) | substitutes |
| Elasticity 3) | proportion of one's budget |
| Marginal thinking | weighing expected additional benefits against expected additional costs |
| Law of Demand | all else being equal, there is an inverse relationship between price and quantity demanded |
| Demand Shift 1) | number of consumers |
| Demand Shift 2) | tastes and preferences |
| Demand Shift 3) | income |
| Demand Shift 4) | price of substitutes |
| Demand Shift 5) | price of complements |
| Demand Shift 6) | expected price of the good |
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