Elasticity Flashcards

0
Q

Inelasticity

A

Perfectly inelastic=0

Inelastic = <1

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1
Q

PeD

A

Measure of how much the Qd of a good responds to a change in P
=%

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2
Q

Elasticity

A

Perfect=infinity
Elastic= >1
Unit= 1

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3
Q

Factors affecting PeD

A
Availability of close substitutes
Necessities vs luxuries
Type of market
Proportion of income on product
Time
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4
Q

Working out PeD using midpoint method

A

PeD= (Q2-Q1) / [(Q2 + Q1) / 2]
|
(p2-p1) / [(p2+p1) / 2]

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5
Q

What is the total expenditure

A

Amount paid by buyers (PxQ)
Inelastic- P and TE move SAME direction
Elastic- OPPOSITE
Unit- CONSTANT

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6
Q

What is income elasticity of demand

A

Measure of how much Qd responds to a change in consumers income
YeD- %

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7
Q

What is cross price elasticity of demand

A

Qd of 1 good responds to change in P of other

XPeD= %

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8
Q

What is price elasticity of supply

A

Qd responds to

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9
Q

Determinants of PeS

A
Time
Productive capacity
Size of firm/industry
Mobility of FOP
Ease of storing stock/inventory
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