Price Elasticity Flashcards
(10 cards)
Income Elasticity of Demand
Measures the responsiveness or sensitivity of demand to a change in consumer income.
What does negative YED mean
As income rises, damnd falls - or as income falls, demand rises
What goods have a negative YED
inferior goods
What goods have a positive YED
Normal goods
What is a positive YED?
Definition
As income rises, more is demand.
Price Elasticity of Demand
definition
Measures the responsiveness or sensitivity of the quantity demand to a change in price.
Factors affecting the PED
- Availability of Substitues
- Proportion of income spent on product
- Nature of goods
- Addictive consumption
- Time period
Price Elasticity of Supply
Measures the responsiveness or sensitivity of the quantity supplied to a change in price
Factors affecting the PES
- Availability of stocks
- Stock hoarding ability
- Price expectations
- Time period
Cross Price Elasticity of Demand
Measures the responsiveness or sensitivity of the quantity demanded of one good to a change in price of another good.
