2.2 Price, income and cross-elasticities of demand Flashcards
1
Q
What is price elasticity of demand ?
A
The responsiveness of a change in demand to a change in price
2
Q
Queue before you pee
What is the equation of price elasticity of demand ?
A
% change QD / % change P
3
Q
What is a price elastic good ?
A
A good for which the change in quantity demanded is VERY RESPONSIVE to a change in price.
PED>-1
4
Q
what is a price inelastic good ?
A
A good for which the change in quantity demanded is NOT VERY RESPONSIVE to a change in price
PED<-1
5
Q
what is a unitary elasic good ?
A
Change in quantity demanded is equal to a change in price.
PED=-1
6
Q
What is a perfectly inelastic good ?
A
A good for which the quantity demanded does not change when price changes. PED=0
