elasticity of demand
inelastic
elastic
unitary elastic
total revenue
normal good
inferior good
Elasticity of demand refers to the degree of responsiveness of the quantity demanded of a good or service to changes in its price.
Inelastic demand means that the quantity demanded of a good or service is not significantly affected by changes in its price. In other words, demand remains relatively stable even if the price changes.
Elastic demand means that the quantity demanded of a good or service is highly responsive to changes in its price. If the price increases, the quantity demanded decreases significantly, and if the price decreases, the quantity demanded increases significantly.
Unitary elastic demand refers to a situation where the percentage change in the quantity demanded is equal to the percentage change in price. In other words, the demand is neither inelastic nor elastic.
Total revenue is the total amount of money received from the sale of a good or service. It is calculated by multiplying the price of the good or service by the quantity sold.
Normal goods are goods for which demand increases as consumer income increases. These goods are considered to be necessities or luxury goods that people tend to buy more of when they have higher incomes.
Inferior goods are goods for which demand decreases as consumer income increases. These goods are typically seen as lower-quality or less desirable options, and people may switch to better alternatives when they can afford them.
1. Elasticity of Demand: Elasticity of demand is a measure of the responsiveness or sensitivity of quantity demanded to a change in price. It shows how much the quantity demanded changes as a result of changes in price. It is usually calculated as the percentage change in quantity demanded divided by the percentage change in price.
2. Inelastic: Inelastic demand refers to a situation where the percentage change in quantity demanded is less than the percentage change in price. In other words, a change in price has a relatively small impact on the quantity demanded. Goods with inelastic demand are typically necessities or goods for which there are few close substitutes.
3. Elastic: Elastic demand refers to a situation where the percentage change in quantity demanded is greater than the percentage change in price. In other words, a change in price has a relatively large impact on the quantity demanded. Goods with elastic demand are typically luxury items or goods for which there are many close substitutes.
4. Unitary Elastic: Unitary elastic demand refers to a situation where the percentage change in quantity demanded is equal to the percentage change in price. In other words, a change in price has an equal impact on the quantity demanded. The elasticity of demand is equal to 1 in this case.
5. Total Revenue: Total revenue is the total amount of money received by a firm from the sale of its goods or services. It is calculated by multiplying the price per unit by the quantity sold. Total revenue is an important measure for businesses as it indicates the overall earning from sales.
6. Normal Good: A normal good is a type of goods where demand increases with an increase in consumer income and decreases with a decrease in consumer income, while the prices of the goods remain constant. As income rises, consumers have more disposable income to spend on normal goods, leading to an increase in demand.
7. Inferior Good: An inferior good is a type of goods where demand decreases as consumer income increases, while the prices of the goods remain constant. Inferior goods are usually seen as lower-quality alternatives to other goods. As consumer income rises, they tend to switch to higher-quality goods, resulting in a decrease in demand for the inferior good.