Formula

Question 1

PED

1.2.3

Answer 1

PED = % change in Qd / % change in P

Always negative.
Inelastic < 1 (perf 0)
Elastic > 1 (perf infinity)
Unit elastic = 1

Question 2

YED

1.2.3

Answer 2

YED = % change in Qd / % change in income (Y)

Can be negative or positive.
+ve YED -> normal (necessity 0 to 1, luxury > 1)
-ve YED -> inferior

Question 3

XED

1.2.3

Answer 3

XED = % change in Qd for good A / % change in P for good B

+ve XED -> increase in P of good B leads to increase in Qd of good A (substitutes)
> 1 strong sub
< 1 weak sub

-ve XED -> increase in P of good B leads to decrease in Qd of good A (complements)
> (-) 1 strong comp
< (-) 1 weak comp

XED = 0 -> unrelated, not sub or complements

Question 4

Marginal Utility

1.2.2

Answer 4

Marginal Utility = Change in units consumed/change in total utility.