1.2 Elasticty

Question 1

PED:
XED:
YED:
PES:

Answer 1

PED: Price Elasticity of Demand
XED: Cross Elasticity of Demand
YED: Income Elasticity of Demand
PES: Price Elasticity of Demand

Question 2

Values of:

Elasticity
Inelasticity
Unitary Elastic
Perfectly Inelastic
Perfectly Elastic

Answer 2

Elastic >1
Inelastic <1
Unitary = 1 
Perfectly Inelastic = 0
Perfectly Elastic = infinity

Question 3

is elasticity just the slope

Answer 3

Nope, it varies along the curve

Question 4

determinants of PED

Answer 4

1. The number and closeness of substitutes
2. The necessity of the product and hw widely the product is defined. (eg. Pepsi (branded) vs all sodas)
3. The time period considered: As prices change, it takes time for consumer to change their purchasing habits. PED is said to be less elastic in the short term and then becomes more elastic.