Elasticity

Question 1

YED

Answer 1

YED measures the responsiveness of demand of s good to a change in income, ceteris paribus.

Question 2

CED

Answer 2

CED measure the responsiveness of demand of a good X to changes in price of good Y, ceteris paribus.

Question 3

PES

Answer 3

PES measures the responsiveness of quantity supplies of a good to changes in its own price, ceteris paribus.

Question 4

Determinants of Demand

Answer 4

Price of related good (substitutes and complements)
Taste and preferences (fashion/fad, govt policies, advertising and seasons)
Income
Demographics (determines potential market size)
Expectations (expectations of future Y/prices and speculation)

Question 5

Determinants of Supply

Answer 5

Cost of production
Changes in price of related goods (comp or joint supply)
Number of producers
Supply shocks
Expectations (future outlook on profitability)

Question 6

Determinants of PED

Answer 6

Substitutes (no of substitutes)
Necessities (basic goods vs luxury goods)
Income (proportion of)
Time period

Question 7

Determinants of YED

Answer 7

Nature of Goods
Level of Income
*relative

Question 8

Determinants of PES

Answer 8

Spare Capacity
Nature of Production (length of production and ease of factor substitution)
Inventory/stock (inventory is not part of current supply)
Time Period

Question 9

PED

Answer 9

PED measure the responsiveness of quantity demanded of a good to changes in its own price, ceteris paribus.