Glossary Terms:

Price Elasticity: From Tires to Toothpicks

Glossary terms from:
http://www.econedlink.org/e551


Brand

A trade name used to identify a product produced by a particular company, distinguishing it from similar products produced by competitors.

Budget

A spending-and-savings plan, based on estimated income and expenses for an individual or an organization, covering a specific time period.

Consumers

People who use goods and services to satisfy their personal needs and not for resale or in the production of other goods and services.

Consumption

Spending by households on goods and services. The process of buying and using goods and services.

Decision

A conclusion reached after considering alternatives and their results.

Demand

The quantity of a good or service that buyers are willing and able to buy at all possible prices during a period of time.

Elasticity of Demand

Price elasticity of demand is the percentage change in quantity demanded as a result of the percentage change in demand price. Generally, a relative response of a change in quantity demanded to a relative change in price.

Goods

Tangible objects that satisfy economic wants.

Law of Demand

As the price of a good or service rises (or falls), the quantity of that good or service that people are willing and able to buy during a certain period of time falls (or rises).

Long Run

A period of time long enough for firms to change the quantities of all the resources they use; the exact amount of time varies depending on the industry.

Price

The amount of money that people pay when they buy a good or service; the amount they receive when they sell a good or service.

Price Elasticity of Demand

The responsiveness of the quantity demanded of a good or service to changes in its price. The price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price.

Producers

People and firms that use resources to make goods and services.

Product

A good or service that can be used to satisfy a want.

Quantity Demanded

The amount of a good or service people will buy at a given price in a given period of time.

Services

Activities performed by people, firms or government agencies to satisfy economic wants.

Short Run

A period of time long enough for existing firms to change some--but not all--of the resources they use.

Substitute

A good or service that may be used in place of another good or service; examples include tap water for bottled water (or vice versa) and movies for concerts (or vice versa).

Wants

Desires that can be satisfied by consuming or using a good or service. Economists do not differentiate between wants and needs.