Elasticity Flashcards
What is PED
Price elasticity of demand
whats the PED equation
% change QD/% change price
what are the elasticities with PED
- infinity perfectly elastic
-1 unit elastic
0 perfectly inelastic
What are the factors that effect PED
- availability of substitutes
what is PES
price elasticity of supply
What is the PES equation
% change QS/% change P
what are the elasticities of PES
0 - perfectly inelastic
1- unit elastic
infinity - perfectly elastic
What factors effect PES
- Availability of substitutes
- availability to stockpile
What is YED
income elasticity of demand
what is the YED equation
% change QD / % change Y
what is the elasticity of YED
- infinity - elastic
-1-1 inelastic
1- infinity - elastic
YED goods
A normal good is a good with positive YED
An inferior good is a good with a negative YED
what is XED
cross elasticity of demand
what is the XED equation
% change QD of good B / % change of good A
what are the elasticities for XED
less than 0 = compliments
more than 0 = substitutes
The bigger the number the more complimentary of substitute the goods are
what are complimentary goods
goods or products that go well together
substitutes
goods or services that are similar and can be swapped
independant
neither substitutes or compliments
what is consumer surplus
The amount a consumer is willing to pay compared to the amount they actually pay for the good/service
producer surplus
the amount a producer is willing to accept for a good/service compared to how much they accept for a good/service
where are consumer and producer surplus located on a supply demand disagram
consumer on top
producer below
