account for close substitutes, it seems they may have also misjudged customers’ preferences and tastes. However,

Access for free at openstax.org
the very substantial increase over time in the number of Netflix subscribers suggests that the preference for

streaming video may well have overtaken the preference for physical DVD disks. Netflix, the source of numerous late

night talk show laughs and jabs in 2011, may yet have the last laugh.

5.4 • Elasticity in Areas Other Than Price 131
132 5 • Key Terms

Key Terms

constant unitary elasticity when a given percent price change in price leads to an equal percentage change in

quantity demanded or supplied

cross-price elasticity of demand the percentage change in the quantity of good A that is demanded as a result

of a percentage change in the price of good B

elastic demand when the elasticity of demand is greater than one, indicating a high responsiveness of quantity

demanded or supplied to changes in price
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