1.2 Elasticty Flashcards
1
Q
PED:
XED:
YED:
PES:
A
PED: Price Elasticity of Demand
XED: Cross Elasticity of Demand
YED: Income Elasticity of Demand
PES: Price Elasticity of Demand
2
Q
Values of:
Elasticity Inelasticity Unitary Elastic Perfectly Inelastic Perfectly Elastic
A
Elastic >1 Inelastic <1 Unitary = 1 Perfectly Inelastic = 0 Perfectly Elastic = infinity
3
Q
is elasticity just the slope
A
Nope, it varies along the curve
4
Q
determinants of PED
A
- The number and closeness of substitutes
- The necessity of the product and hw widely the product is defined. (eg. Pepsi (branded) vs all sodas)
- The time period considered: As prices change, it takes time for consumer to change their purchasing habits. PED is said to be less elastic in the short term and then becomes more elastic.