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Microeconomics Y12 > Elasticity > Flashcards

Elasticity Flashcards

1
Q

What is elasticity

A

The responsiveness to a change

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2
Q

PeD

A

Percentage change of quantity demanded/percentage change in price

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3
Q

PeS

A

Percentage change in quantity supplied/ percentage change in price

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4
Q

XeD

A

Percentage change in quantity demanded of X/ percentage change in price of Y

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5
Q

YeD

A

Percentage change in quantity demanded/ per a change in income

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6
Q

What happens if PeD is greater than 1 or less than -1

A

Good is price elastic

Quantity demanded is highly responsive to change in price

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7
Q

What happens if PeD is less than 1 but greater than -1

A

Good is price inelastic

Quantity demanded is not very responsive to a change in price

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8
Q

What happens if PeD is equal to 1

A

The good is unit elastic

The percentage change in quantity demanded is equal to the percentage change in price- proportionate

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9
Q

What happens if PeD is equal to 0

A

The good is perfectly inelastic

A change in price will have no impact on quantity demanded

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10
Q

What happens if PeD is Infinity

A

The good is perfectly elastic

Any change in price will see quantity demanded fall to 0

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11
Q

Key factors affecting PeD

A

Substitutability
Time
Necessity/luxury
%income spent on product

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12
Q

What is substitutability

A

The more close substitutes a product has the more price elastic it’s demand will be

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13
Q

How does time affect PeD

A

Short run PeD will be price inelastic

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14
Q

What is income elasticity of demand

A

Measures the responsiveness of demand for products to changes in the levels of disposable income in an economy

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15
Q

YeD

A

Percentage change in quantity demanded/percentage change in income

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16
Q

What happens if YeD is less than 1

A

Demand is income inelastic

17
Q

What happens if YeD is greater than 1 or less than -1

A

Demand is income elastic

18
Q

What happens if YeD is less than 0

A

Income rises but demand for this good falls- inferior goods

19
Q

What is cross elasticity of demand

A

Measures the responsiveness of quantity demanded of one product to changes in the price of another good

20
Q

What happens if XeD is very high(5)

A

Putting prices up will lose customers

21
Q

What happens ifXeD is low

A

You have more freedom to changing prices

22
Q

What is price elasticity of supply

A

Measures the responsiveness of quantity supplied of a product to changes in the price of that product

23
Q

PeS

A

Percentage change in quantity supply/percentage change in price

24
Q

2 factors influencing PeS

A

Availability of materials and other factors of production

Time period

25
Q

Is spare capacity elastic or not

A

Elastic

26
Q

Is hoarding stock elastic or not

A

Elastic

27
Q

2 types of labour and are they elastic or not

A

Skilled labour- inelastic

Unskilled labour- elastic

28
Q

How to increase PeS

A 
Spare capacity 
Latest technology
Stockpile
Training for workers 
Better storage 
Flexible workers
29
Q

2 types of industry and are they elastic or not

A

Agricultural products- inelastic

Service industries- elastic

30
Q

If XeD between 2 products is negative, then it may be deducted that they are what?

A

Complements

31
Q

If XeD between 2 products is positive, then it may be deducted that they are what?

A

Substitutes

Microeconomics Y12 (7 decks)

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