TOPIC 3 - ELASTICITY Flashcards

1
Q

WHAT IS PED?

A

MEASURES THE RESPONSIVENESS OF DEMAND TO A CHANGE IN PRICE.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

WHAT IS PED AND ITS DETERMINANTS?

A
  1. NECESSITY
  2. ADDICTIVENESS
  3. SUBSTITUTES
  4. TIME
  5. INCOME
  6. QUALITY
  7. BRAND LOYALTY
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

WHAT ARE THE DETERMINANTS OF PES?

A
  1. BARRIERS TO ENTRY
  2. FACTOR MOBILITY
  3. RAW MATERIALS
  4. INVENTORY
  5. TIME
  6. SPARE CAPACITY.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

WHAT IS ELASTIC DEMAND?

A

DEMAND IS RESPONSIVE TO A CHANGE IN PRICE. ANY CHANGE IN PRICE LEADS TO A GREATER PERCENTAGE DECREASE IN QUANTITY DEMANDED.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

WHAT FIGURE REPRESENTS ELASTIC DEMAND?

A

PED OF LESS THAN -1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

WHAT IS INELASTIC DEMAND?

A

DEMAND IS NOT VERY RESPONSIVE TO A CHANGE IN PRICE. ANY CHANGE IN PRICE LEADS TO A SMALLER PERCENTAGE CHANGE IN QUANTITY DEMANDED.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

WHAT FIGURE REPRESENTS INELASTIC DEMAND?

A

PED IS GREATER THAN -1 BUT LESS THAN 0.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

WHAT IS UNITARY ELASTICITY?

A

PERCENTAGE CHANGE IN QUANTITY DEMANDED EQUALS PERCENTAGE CHANGE IN PRICE.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

WHAT FIGURES REPRESENTS UNITARY ELASTICITY?

A

PED OF 1 FOR PES
PED OF -1 FOR PED

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

HOW DO YOU WORK OUT REVENUE?

A

PRICE x QUANTITY

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

WHAT DOES PERFECTLY ELASTIC DEMAND MEAN?

A

PED IS INFINITELY NEGATIVE. PURCHASERS WON’T BUY ANY PRODUCT ABOVE A CERTAIN PRICE.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

WHAT DOES PERFECTLY INELASTIC DEMAND MEAN?

A

PED IS 0 AS THE SAME AMOUNT IS DEMANDED WHATEVER THE PRICE.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

WHAT IS PES?

A

RESPONSIVENESS OF SUPPLY TO A CHANGE IN PRICE.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

WHAT IS INCOME ELASTICITY OF DEMAND?

A

RESPONSIVENESS OF DEMAND TO A CHANGE IN INCOME.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

WHAT IS THE YED OF NORMAL GOODS THAT ARE NECESSITIES?

A

POSITIVE BUT CLOSE TO 0

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

WHAT IS THE YED OF NORMAL GOODS THAT ARE LUXURIES?

A

POSITIVE HIGHER NUMERICAL VALUES.

17
Q

WHAT WOULD BE THE YED OF INFERIOR GOODS?

18
Q

WHAT IS CROSS ELASTICITY OF DEMAND?

A

MEASURES RESPONSIVENESS OF DEMAND FOR 1 PRODUCT TO A CHANGE IN PRICE OF ANOTHER PRODUCT.

19
Q

WHAT IS THE XED FOR SUBSTITUTES?

20
Q

WHAT IS THE XED FOR COMPLEMENTS/ GOODS IM JOINT OR DERIVED DEMAND?

21
Q

WHAT IS THE XED FOR UNRELATED PRODUCTS?

22
Q

WHAT IS THE EQUATION FOR PED?

A

Ped = %🔺️ Quantity demand ÷ %🔺️ price

23
Q

WHAT IS PES?

A

PES = %🔺️ Quantity demanded ÷ %🔺️ price

24
Q

WHAT IS THE YED EQUATION?

A

YED = %🔺️ Quantity demanded ÷ %🔺️ income

25
WHAT IS THE EQUATION OF XED?
XED = %🔺️ Quantity demanded for X ÷ %🔺️ Price of Y
26
WHAT ARE EXAMPLES OF GOODS WITH INELASTIC PED?
1. CIGARETTES 2. WATER 3. APPLE PRODUCTS
27
WHAT ARE EXAMPLES OF GOODS WITH ELASTIC PED?
1. SOFT DRINKS
28
WHAT ARE EXAMPLES OF GOODS WITH INELASTIC PES?
1. STRAWBERRIES ( LOW INVENTORY) 2. DOCTORS ( HIGH BARRIERS TO ENTRY) 3. ELECTRIC CARS ( LACK OF RAW MATERIALS)
29
WHAT ARE EXAMPLES OF GOODD WITH ELASTIC PES?
1. WAITERS (HIGH FACTOR MOBILITY) 2. ELECTRICITY ( SPARE CAPACITY) 3. DIGITAL DOWNLOADS E.G SONGS ( PERFECTLY ELASTIC)