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| the ratio of the percent change in quantity demanded of a product or a resource to the percentage change in its price; a measure of the responsiveness of buyers to a change in the price of a product or resource. | ||
| when the quantity demanded does not respond at all to changes in the price; the demand curve is a vertical line | ||
| when any price increase will cause the quantity demanded to drop to zero; the demand curve is a horizontal line | ||
| price elasticity of demand is greater than 1 | ||
| price elasticity of demand is less than 1 | ||
| price elasticity of demand is exactly 1 | ||
| the total value of the sale of a good or service; it is equal to the price multiplied by the quantity sold | ||
| a test to determine elasticity of demand between any two prices: Demand is elastic if total revenue moves in the opposite direction from price; it is inelastic when it moves in the same direction as price; and it is of unitary elasticity when it does not change when the price changes. | ||
| a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good | ||
| the percent change in the quantity of a good demanded when a consumer's income changes divided by the percent change in the consumer's income. | ||
| a measure of the responsiveness of the quantity of a good supplied to the price of that good It is the ratio of the percent change in the quantity supplied to the percent change in the price as we move along the supply curve | ||
| the period that occurs when the time immediately after a change in market price is too short for producers to respond | ||
| a period of time sufficiently short that at least one of the firm's factors of production cannot be varied; plant capacity is fixed | ||
| a time period long enough for firms to adjust their plant sizes and for new firms to enter (or existing firms to leave) the industry | ||
| the maximum amount that a buyer will pay for a good | ||
| is the net gain to an individual buyer from the purchase of a good; it is equal to the difference between the buyer's willingness to pay and the price paid. | ||
| the sum of the individual consumer surpluses of all the buyers of a good in the market. | ||
| lowest price at which he or she is willing to sell a good | ||
| the net gain to an individual seller from selling a good; it is equal to the difference between the price received and the sellers cost. | ||
| the sum of the individual producer surpluses of all the sellers of a good in a market. | ||
| the sum of consumer surplus and producer surplus; the total net gain to producers and consumers from trading in a market | ||
| any tax in which the rate increases as the amount subject to taxation increases | ||
| a tax for which the percentage of income paid in taxes decreases as income increases | ||
| a tax in which the average tax rate is the same at all income levels | ||
| a tax on sales of a particular good or service | ||
| the actual division of the burden of a tax between buyers and sellers in a market | ||
| the fall in total surplus that results from a market distortion, such as a tax | ||
| a tax that is the same amount for every person (or firm) | ||
| the amount of satisfaction one gets from a good or service | ||
| the change in total utility a person receives from consuming one additional unit of a good or service | ||
| the principle that our additional satisfaction, or our marginal utility, tends to go down as more and more units are consumed | ||
| the principle that to obtain the greatest utility, the consumer should allocate money income so that the last dollar spent on each good or service yields the same marginal utility; also known as the optimal consumption rule |
