Elastiscity (Structure)

Question 1

Identify the type of elasticity of Good A based on your coefficient results

Answer 1

What is your PED coefficient and what does it mean?
Define elastic/ inelastic goods.
List the characteristics of elastic/ inelastic goods.
Then go through each characteristic and say WHAT it is for BMWs. WHY this is. HOW do you know this?
Conclusion
eg. Therefore Apple ipads display all four characteristics of elastic goods/services and so it makes sense that they have an elastic price elasticity of demand.

Question 2

Explain the relationship between two goods

Answer 2

Define Cross elasticity
Interpret your Pex coefficient.
Define substitutes/ compliments. Apply to the situation.
What data evidence do you have that shows that if the two goods are substitutes or compliments?
What can you say about the strength of the relationship?

Question 3

Explaining total revenue

Answer 3

Calculate revenue for Good A (old and new)
Explain and link to graph, use coefficients

Calculate revenue for Good B (old and new)
Explain and link to graph, subsitutes or compliments, use coefficients

Calculate overall total revenue (old and new)
And the change

Sentence… has the business benefited (increase/ decrease in total revenue).