Chaoter 3 Flashcards
1
Q
What is PED
A
how responsive demand is to price.
When price increases demand should decrease
2
Q
Elastic
A
Demand is sensitive to a change in price.
PED less than -1.
Increase in selling price cause sales revenue decrease.
3
Q
Inelastic
A
Demand not so sensitive to a change in price
Between 0 and -1.
Increase in selling price can cause sales revenue to increase or change a little bit.
4
Q
YED
A
Change in demand to a change in income
Demand / income
5
Q
Normal good
A
Demand increases when income increase.
Positive YED.
Clothes, income ^ buy good quality clothes.
6
Q
Inferior good
A
Negative YED.
Increase income, decrease demand.
E.g store brand products
Public transport like bus when income increase demand decrease.
7
Q
Luxury goods
A
+ YED
bigger than 1
Designer clothes,
Expensive holidays
