Elasticities Flashcards
(6 cards)
1
Q
Elasticities
A
A measure of responsiveness.
How much something changes when there is a change in one of the factors of determinents.
2
Q
Elasticity of Demand
A
A measure of how mich the demand of something changes when there is a change in the factors of determinents of demand.
3
Q
Three Elasticities of demand
A
- Price Elasticity of Demand (PED)
- Cross Elasticity of Demand (XED)
- Income elasticity of Demand (YED)
4
Q
Price Elasticity of Demand (PED)
A
A measure of how responsive the quantity demanded of a product changes when there is a change in the price of the product.
PED=% change in quantity demanded/ % change in price of the product.
5
Q
Range of values of PED
A
0-Infinity
6
Q
When PED=0
A
- A change in the price of a product will have no effect on the quantity demanded.
- The % change in quantity demanded=0%
- Demand is perfectly inelastic(completely unresponsive to price changes)
