PED /IED Flashcards
1
Q
what does ped mean
A
the responsiveness of demand to a change in the selling price
2
Q
what does IED mean
A
responsiveness of demand to a change in consumers level income
3
Q
formula for PED
A
change in demand/ change in price
4
Q
formula for IED
A
change in demand / change in income
5
Q
what is PED always ?
A
negative
6
Q
what does it mean if the ped is between 0 and -1
A
demand is inelastic and an increase in price causes an increase in revenue
7
Q
what does it mean if the ped is between -1 and -2
A
demand is elastic and a decrease in price causes an increase in revenue
8
Q
what goods have a positive ied
A
normal goods
9
Q
what goods have a negative ied
A
inferior goods
