ARE 2150 Study Guide - Final Guide: Demand Curve, Perfect Competition, Economic Equilibrium
29 Jan 2020
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Inelastic: inelastic is an economic term referring to the static quantity of a good or service when its price changes. Inelastic means that when the price goes up, consumers" buying habits stay about the same, and when the price goes down, consumers" buying habits also remain unchanged. Elastic:elasticity is a measure of a variable"s sensitivity to a change in another variable. In business and economics, elasticity refers the degree to which individuals, consumers or producers change their demand or the amount supplied in response to price or income changes. Perfectly elastic:perfectly elastic demand means that a consumer will not buy a good or service if the price moves at all. An example would be pink tennis balls. If the price of pink tennis balls went up, no one would buy them in lieu of yellow tennis balls. Assuming a perfectly competitive market, if the price went down the producer would not be able to cover his costs.
