93 Glossary: Elasticity
constant unitary elasticity when a given percentage change in price leads to an equal percentage change in quantity demanded or supplied
cross-price elasticity of demand the percentage change in the quantity of good A that is demanded as a result of a percentage change in the quantity of good B demanded
elastic demand when the elasticity of demand is greater than 1, indicating a high responsiveness of quantity demanded to changes in price
elasticity the responsiveness of one variable to changes in another variable
elasticity of savings the percentage change in the quantity of savings divided by the percentage change in interest rates
elastic supply when the elasticity of supply is greater than 1, indicating a high responsiveness of quantity supplied to changes in price
growth rate percentage change: the change in quantity divided by the quantity
income elasticity of demand the percentage change in quantity demanded divided by the percentage change in income
inelastic demand when the elasticity of demand is smaller than 1, indicating a low responsiveness of quantity demanded price changes
inelastic supply when the elasticity of supply is smaller than 1, indicating a low responsiveness of quantity supplied to price changes
inferior good a good for which the quantity demanded falls as income rises, and the quantity demanded rises as income falls; income elasticity of demand for an inferior good is negative
infinite elasticity the extremely elastic situation of demand or supply in which the quantity changes by an infinite amount in response to any change in price; also called “perfect elasticity”
normal good a good for which the quantity demanded rises as income rises, and the quantity demanded falls as income falls; income elasticity of demand for a normal good is positive
price elasticity the relationship between the percent change in price resulting in a corresponding percentage change in the quantity demanded or supplied
price elasticity of demand percentage change in the quantity of a good or service demanded divided by the percentage change in price
price elasticity of supply percentage change in the quantity of a good or service supplied divided by the percentage change in price
total revenue the price of an item multiplied by the number of units sold
unitary elasticity when the calculated elasticity is equal to 1, indicating that a change in the price of the good or service results in a proportional change in the quantity demanded or supplied
wage elasticity of labor supply the percentage change in hours worked divided by the percentage change in wages
zero elasticity the highly inelastic case of demand or supply in which a percentage change in price, no matter how large, results in zero change in the quantity; also called “perfect inelasticity”