2.6 price elasticity of demand Flashcards
(5 cards)
1
Q
what are the 4 basic types of elasticity
A
1) price elasticity of demand (PED)
2) price elasticity of supply (PES)
3) income elasticity of demand (YED)
4) cross elasticity of demand (XED)
2
Q
what is price elasticity of demand
A
a measure of how much price changes demand
3
Q
how to calculate PED
A
percentage change in quantity demanded / percentage change in price
4
Q
determinants of PED
A
time period
number and closeness of substitutes
proportion of income
luxury vs necessity
5
Q
important rule for economics
A
in economics, PED has a (-) sign in front unlike in business
