Elasticity Flashcards
Factors that determine PED
SPLAT=> Substitutes, Percentage of income spent , luxury/necessity , addictive/habit forming and time period
Factors PES
PSSSSST=>Production lag , stock, substitutability , FOPs , and Time
What are the values for the elasticity?
PED>1 : Elastic demand
PED=1 : Unitary elastic demand
PED<1: Inelastic
What is the value for a complimentary good?
When XED is negative
What is the value for a substitute good?
When XED is positive
What are the values for a luxury good in YED?
YED>1
Value for normal goods in YED?
0<YED<1
Value for an inferior good in YED?
YED<0
What is the formula for PED?
%change of Q.D/%change in price
Formula for XED
%change of Q.D of good A/%change in price of good B
Formula for YED?
%change in Q.D/%change in income
Formula for PES?
%change in Q.S/%change in price
