# data[].attributes.body
Elasticity: measurement of the sensitivity of change in one thing related to another

5 Determinants of Price Elasticity of Demand
Substitutes
Time
Income
Luxury v. Necessity

Price Elasticity of Demand: (in picture, always ignore negative sign when using this formula)

PE>1 elastic
=1 unit elastic
<1 Inelastic

Total Revenue: (in picture below)

Midpoint method: used to calculate more accurately, disregarding taking the final-initial, or initial-final (in picture below)

Elastic vs. Inelastic Demand related to Revenue:
If demand is elastic:
when P increases, total revenue decreases
when P decreases, total revenue increases
If demand is inelastic:
when P increases, total revenue increases
when P decreases, total revenue decreases

Causes of this ^^^^ stuff are the:
price effect - when P increases, each unit sold has a higher price so more revenue is made
quantity effect - when P increases, fewer units will be sold so less revenue is made

Demand Curve elasticity: Along the demand curve, it is inelastic at lower prices and elastic at higher prices (in picture below)

# data[].attributes.body
Cross price elasticity of demand: measures the effect of the change in price of one good and the change in quantity of another (in picture below) always take sign into account:
If positive, the goods are substitutes
If negative, the goods are complements

Income elasticity of demand: (in picture below) always take sign into account:
If positive, it is a normal good
If negative, it is an inferior good

Price elasticity of supply: (in picture below), don' take sign into account,
factors are:
Availability of inputs and time

Graphs of perfectly elastic and inelastic are the same as demand, and the rules for PEs are the same as well except it is supply

# data[].attributes.body
Consumer surplus: difference between amount consumers are willing to pay and will actually pay
willing to pay - price paid

Producer surplus: difference between amount producers are willing to supply and what they actually receive
price received - cost(the lowest selling price)

Consumer and Producer Surplus on a graph:  (in picture below)

price falls, consumer surplus increases

price rises, producer surplus increases

# data[].attributes.body
Taxes:
progressive: tax rises more than in proportion to income
proportional: same tax rate regardless of income
regressive: low earners pay higher taxes proportional to their income than high earners

excise tax: tax on a good or service
-creates a wedge
supply curve shifts left

excise tax is the vertical difference in value of supply between the shift
tax decrease both producer and consumer surplus

# data[].attributes.body
marginal utility: change in total utility by consuming another unit of the same good or service

principle of diminishing marginal utility: each additional unit consumed of the same good or service adds less to total utility than the previously consumed good

optimal consumption bundle: maximizes a consumer's total utility within the budget

***Optimal consumption is when marginal utility per dollar spent is equal between all goods, essentially when it is in equilibrium.

Marginal utility per dollar spent: (in picture below)