IB Economics 2.5 Elasticities of Demand Key Definitions

Fluctuations in the growth of real output, characterised by alternating phases of expansion (rising real output) and contraction (falling real output).

A curve showing the quantity demanded of a good at each level of consumer income, holding all prices constant. Its slope and shape reveal the good's income elasticity of demand (YED).

A measure of the responsiveness of demand for changes in income.

Taxes levied on spending on goods and services. They are called indirect because while consumers contribute to part or all of the tax, it is the suppliers (firms) who collect and transfer these taxes to the government authorities (consumers pay the taxes indirectly).

Goods and services that are not essential for one's living and often bought for leisure purposes.

Goods or services produced by the workings of labour, capital and raw materials.

Goods or services crucial for ones' life and extremely difficult to live without.

A measure of the responsiveness of quantity demanded when there is a price change.

Goods and services that directly come from natural resources or using the factor of production called land.

Amount of money received by firms when they sell a good (or service).