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AP課程微觀經(jīng)濟學名詞解釋(3)

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  Please highlight critical terms;

  *=not important for exam but you should know

  Chapter Three Elasticity

  Elastic-the demand for that good is on the more price, the sensitiveness.

  (price) elasticity of demand-the responsiveness of buyers to changes in price. Specifically, the percentage change in quantity demanded for each percentage change in price, other things being equal. Elasticity can be calculated using the formulas

  Necessity-the price elasticity is between 0 to 1. The goods people need regardless of price.

  Luxury- the price elasticity is larger than 1. The goods people will purchase within the acceptance of price.

  income elasticity- the percentage change in quantity demanded divided by the percentage change in income. Income elasticity could be positive or negative, depending on the good. normal good- a good that will have an increase in demand as income of buyers goes up; the income elasticity for such a good will be positive. inferior good- a good that will have a decrease in demand as income of buyers goes up; the income elasticity for such a good will be negative.

  Cross-price elasticity of demand-the responsiveness of the quantity demand of one good to the price of another good.

  substitute- good used instead of another complement- good used along with another


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