DEFINTION LIST FOR H2 ECONOMICS

Demand, Supply and Elasticity

Definitions Needed for This Topic:
1. Demand: is the quantity that consumers are willing and able to purchase
at different price levels during a given time period, ceteris paribus.
2. The Law of Demand states that an inverse relationship exists between the
price of good and the quantity demanded of the good, ceteris paribus.
3. Supply: is the quantity that producers are willing and able to produce and
sell at different price levels during a given time period, ceteris paribus.
4. The Law of Supply states that a direct relationship exists between the
prices of a good and the quantity supplied of that good, ceteris paribus.
5. The Price Elasticity of Demand measures the degree of responsiveness of
the quantity demanded of an item to a given change in the price of that
item itself, ceteris paribus.
6. The Price Elasticity of Supply measures the degree of responsiveness of
the quantity supplied of a good to a given change in the price of the good
itself, ceteris paribus.
7. The Income Elasticity of Demand measures the degree of responsiveness
of the demand of a good to a given change in the income level, ceteris
paribus.
8. The Cross Elasticity of Demand measure the degree of responsiveness of
the demand of a good to a given change in the price of another good,
ceteris paribus.