ECON 2001.01 Study Guide - Fall 2018, Comprehensive Term Test Notes - List Of The Tribe Characters, Marginal Product, Stretch Fabric

• School: Ohio State University
• Department: Economics
• Course: ECON 2001.01
• Professor: Jeffrey Buser

Document Summary

Elasticity is a measure of how sensitively consumers and producers respond to a change in a market. It is considered in both demand and supply. Measures how the consumers and producers react to a change in the price of the good and its related good, and also the income. Elastic: a change in price causes a large reaction in consumers or producers, which leads to a large change in demand. Inelastic: a change in price causes a small reaction in consumers or producers. Useful for business to determine whether a price increase will lead the total revenue to rise or fall. Total revenue is the amount that a company gains as profits. Total revenue (tr) equals price paid (p) multiplied by quantity sold (q), or tr = p x q. When demand is elastic, the quantity effect is larger than the price effect.