theme 1: elasticity Flashcards
1
Q
Price elasticity of demand
PED
A
a numerical measure of the responsiveness of demand to a change in price
2
Q
Relatively Elastic
A
A small decrease in price led to a large increase in the quantity demanded
3
Q
Relatively Inelastic
A
The same decrease in price led to a very small increase in the quantity demanded
4
Q
SPLAT
A
Substitutes, percentage of income, luxury or necessity, addictive, time period
5
Q
Cross Elasticity of Demand
XED
A
A numerical measure of the responsiveness of Demand for one good to a change in price of another.
6
Q
Income Elasticity of Demand
YED
A
Responsiveness of demand to a change in income- The Income is measured using ARI (ARI stands for Average Real Income, it is often measured using average weekly wages)
