Microeconomics Chapter 4 Elasticity
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| Price Elasticity of Demand | Consumers are highly responsive to price changes
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| Midpoint Formula | Averages the two prices and the two quantities as the reference points for computing the percentages
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| Elastic | Specific percentage change in price results in a larger percentage change in quantity demanded
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| Inelastic | Specific percentage change in price produces a smaller percentage change in quantity demanded
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| Perfectly Inelastic | Price change results in no change whatsoever in the quantity demanded
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| Perfectly Elastic | Small price reduction causes buyers to increase their purchases from zero o all they can obtain, the elasticity coefficient is infinite
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| Total Revenue | Total amount the seller receives from the sale of a product in a particular time period; calculated by multiplying the product price by the quantity sold
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| Total Revenue Test | Easiest way to infer whether demand is elastic or inelastic
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| Market Period | Period that occurs when the time immediately after a change in market price is too short for producers to respond with a change in quantity supplied
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| Short Run | Period of time too short to change plant capacity but long enough to use the fixed-sized plant more less intensively
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| Long Run | Time period long enough for firms to adjust their plant sizes and for new firms to enter the industry
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| Cross Elasticity of Demand | Measures how sensitive consumer purchases of one product are to change in the price of some other product
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| Income Elasticity of Demand | Measures he degree to which consumers respond to a change in their incomes by buying more or less of a particular good
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