elasticity Flashcards
marginal utility
satisfaction gained from an additional unit
Price elasticity of demand
the responsiveness in demand to a change in price
PED formula
% change in QD / % change in price
values of PED
inelastic~ below 1
elastic~ above 1
determinants of elasticity of demand
how old
number of substitutes
luxury/necessity
addictive
unitary price elastic
PED=1, P% and D% are equal
Price elasticity of supply
the responsiveness in supply with a change in price
PES formula
%change in QS / %change in P
values of PES
inelastic~ below 1
elastic~ above 1
determinants of PES
availability of FOP
Time
spare stock
spare capacity
factor substitution
income elasticity of demand
responsiveness in demand to a change in income
IED formula
%change in QD / %change in Y
values of IED
positive= normal good
(demand roses as income rises)
negative= inferior good
(demand falls as income rises)
+2= luxury good
(better than normal)
cross elasticity of demand
the responsiveness in demand in one good with a change in price of the other
XED formula
% change in QD for A
——————————-
% change in P for B
