Micro Economics - Elasticity

Question 1

PED

Answer 1

is a measure of the responsiveness of the quantity of a good demanded to changes in its price. PED is calculated along a given demand curve. If quantity demanded is highly responsive to a change in price, demand is referred to as being price elastic; if quantity demanded is not very responsive, demand is price inelastic

Question 2

total revenue

Answer 2

the amount of money received by firms when they sell a good. It is equal to the price of a good times the quantity
TR = Q x P

Question 3

YED

Answer 3

a measure of the responsiveness of demand to changes in income, and involves demand curve shifts. It provides information on the direction of change of demand (increase or decrease) and the size of the change (size of demand shift curves)

Question 4

Engel curve

Answer 4

the Engel curve shows the relationship of income and quantity over a period of time. At very low incomes a good may be a luxury, as income increases it becomes a necessity and finally at high levels of income it becomes inferior