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DEMAND ELASTICITY AND TOTAL EXPENDITURE: The notion that price-induced changes in total expenditure for a good (price times quantity) depends on the relative price elasticity of demand. In particular, for relatively elastic demand (1 < E < ∞) changes in price cause total expenditure to change in the opposite direction. An increase in price causes total expenditure to fall and a decrease in price causes total expenditure to rise. For relatively inelastic demand (0 < E < 1) changes in price cause total expenditure to change in the same direction. An increase in price causes total expenditure to rise and a decrease in price causes total expenditure to fall. For unit elastic demand (E =1) price changes do not cause any change in total expenditure. Total expenditure is the same whether price increases or decreases.
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TERMS OF TRADE The rate at which goods are traded, either between individuals or between nations. It is the quantity of one good exchanged per unit of another good. The terms of trade is essentially the price. But the price is stated in terms of the quantity of another good. Like any market price, the terms of trade is based on what the buyers are willing to pay and what the sellers are willing to accept. The terms of trade between any two countries is based on the relative opportunity cost in each country.
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ORANGE REBELOON
[What's This?]
Today, you are likely to spend a great deal of time touring the new suburban shopping complex seeking to buy either a large stuffed brown and white teddy bear or a replacement washer for your kitchen faucet. Be on the lookout for gnomes hiding in cypress trees.
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This isn't me! What am I?
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A scripophilist is one who collects rare stock and bond certificates, usually from extinct companies.
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"No amount of business school training or work experience can teach what is ultimately a matter of personal character. " -- Truett Cathy, Chick-fil-A Inc. founder
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IJIO
International Journal of Industrial Organization
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