elasticity of demand The elasticity of demand measures how responsive the quantity demanded is to a change in price; more responsive equals more elastic.

quantity demanded The quantity demanded is the quantity that buyers are willing and able to buy at a particular price.

What happens to seller revenues when the demand curve is inelastic and the price rises? (Review Figure 5.3 if you don’t know immediately.) When the demand curve is inelastic, an increase in price increases seller revenues. In Figure 5.5, the blue rectangle is seller revenues at the no prohibition price; the much larger green rectangle is seller

Total consumer surplus Total consumer surplus is measured by the area beneath the demand curve and above the price.

If increased production requires much higher per-unit costs, then supply will be less elastic—or inelastic. If production can increase without much increasing per-unit costs, then supply will be elastic.

Thus, the larger the share of a person’s budget devoted to a good, the more elastic his or her demand for that good is likely to be.

If the price of a good that you want is high, should you blame the seller? Not if the market is competitive. Instead, you should “blame” other buyers for outbidding you.

Amazingly, the inflation rate in Zimbabwe kept rising. In January of 2008, the government had to issue a 10-million-dollar bank note (worth about 4 U.S. dollars), and a year later they announced a 20-trillion-dollar note that bought about what 10 million dollars had a year earlier. In early 2009, the inflation rate leaped to billions of percent per

Malaria is far from the only problem that diminishes with wealth and economic growth. In the United States, one of the world’s richest countries, 993 out of every 1,000 children born survive to the age of 5. In Liberia, one of the world’s poorest countries, only about 765 children survive to age 5 (i.e., 235 of every 1,000 children die before