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Economics: Elasticity > Economics: Elasticity > Flashcards

Economics: Elasticity Flashcards

1
Q

More substitutes…

A

means elastic

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2
Q

Less substitutes…

A

means inelastic

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3
Q

Determinants of Demand Elasticity

A

Substitutes
Habit forming
Income
Time

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4
Q

Equation for PED

A

% Change in Price

P1-Po/ (P1-Po)/2

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5
Q

Calculation Revenue

A

Sold * Price

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6
Q

How to write for IB

A

Identify Idea-Define
Provide Explanation
Provide Example

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7
Q

Price Elasticity of Supply (PES)

A

A measure of the responsiveness of producer to price changes.

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8
Q

Price Elasticity of Demand (PED)

A

A measure of the responsiveness of quantity demanded to a change in the product price.

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9
Q

PED>1=

A

Elastic

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10
Q

PED

A

Inelastic

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11
Q

PED=1=

A

Unit Elastic

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12
Q

Midpoint Method

A

Change in P/average P

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13
Q

More horizontal curve=

A

more responsive, more elastic

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14
Q

More vertical curve=

A

less responsive, more inelastic

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15
Q

Equation for PES

A

Same as PED, but using Qs

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16
Q

PES>1

A

Elastic

17
Q

PES

A

Inelastic

18
Q

Determinants of PES

A

Mobility of factors of production
Amount of time following a price change
Primary commodities; manufactured goods

19
Q

Cross Price of Demand (XED)

A

Measures the responsiveness of consumers of a particular good to a change in the price of a related good, substitutes, or complements.

20
Q

XED>1

A

Elastic

21
Q

XED

A

Inelastic

22
Q

Compliments

A

Negative coefficient

23
Q

Substitutes

A

Postive coefficient

24
Q

Determinants of XED

A

Substitutability

Dependence (complements)

25
Q

Income Elasticity of Demand (YED)

A

Measures the rate of response of quantity demanded due to a raise or lowering in a consumers income.

26
Q

low income=

A

demand for inferior goods goes up

27
Q

high income=

A

demand for normal goods goes up

28
Q

Equation for YED

A

% Change in Income

29
Q

How to find percent change

A

Difference of two values/ Sum of two values divided by 2

Economics: Elasticity (1 decks)

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