Edexcel-Price and Income Elasticity Flashcards
1
Q
Price elasticity formula
A
% change in QD
Over
% change in price
2
Q
Elastic PED
A
Greater then 1
3
Q
Inelastic PED
A
-1
4
Q
Elastic price increase
A
Demand decrease
5
Q
Elastic price decrease
A
Demand increase
6
Q
Inelastic price increase
A
Demand increase
7
Q
Inelastic price decrease
A
Demand decrease
8
Q
Income elasticity formula
A
% change in QD
Over
% change in income
9
Q
Luxury YED
A
> 1
10
Q
Necessity YED
A
> 0 <1
11
Q
Inferior goods YED
A
<0 so -
12
Q
Luxury price increase
A
As income rises demand Increaces
13
Q
Necessity price increase
A
Income rises demand stays the same
14
Q
Inferior price increase
A
As incomes rises demand decreases
