PED,PES, XED, YED

Question 1

PED and elasticities

Answer 1

measures the responsiveness of demand to changes in price

negative - inverse relationship

elastic ped = greater than -1

inelastic = between 0 and -1

Question 2

YED

Answer 2

Positive elastic YED = greater than +1, luxury good

negative elastic YED = less than 0 - inferior

Inelastic YED = between 0 and +1 - basic

Question 3

XED

Answer 3

Positive XED = substitutes

Negative XED = complements

Question 4

PES

Answer 4

positive relationship

elastic = greater than +1

Inelastic = between 0 and +1

Question 5

PED equation

Answer 5

%Change in QD
______________
% change in P