Economics 5-9

Economics 5-9 - Economics Study Guide Ch. 5-9 Key Words...

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Unformatted text preview: Economics Study Guide Ch. 5-9 Key Words Elasticity- a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants. Price elasticity of demanded- a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price. Total revenue- the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold. Income elasticity of demanded- a measure of how much the quantity demanded of a good responds to a change in consumers' income, computed as percentage change in quantity demanded divided by the percent change in income. Cross-price elasticity of demand- 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 price of the second good, Price elasticity of supply- a measure of how much the quantity supplied of a good responds to a change in price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price. Price ceiling- a legal maximum on the price at which a good can be sold Price floor- a legal minimum on the price at which a good can be sold Tax incidence- the manner in which the burden of a tax is shared among participants in a market. Welfare economics- the study of how the allocation if resources affects economic wellbeing. Willingness to pay- the maximum amount that a buyer will pay for a good Consumer surplus- the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. Cost- the value of everything a seller must give up to produce. Producer surplus- the amount a seller is paid for a good minus the seller's cost of providing it. Efficiently- the property of a resource allocation of maximizing the total surplus received by all members of society Equity- the fairness of the distribution of well-being among the members of society ...
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