Price Elasticity Flashcards

(10 cards)

1
Q

Income Elasticity of Demand

A

Measures the responsiveness or sensitivity of demand to a change in consumer income.

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2
Q

What does negative YED mean

A

As income rises, damnd falls - or as income falls, demand rises

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3
Q

What goods have a negative YED

A

inferior goods

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4
Q

What goods have a positive YED

A

Normal goods

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5
Q

What is a positive YED?

Definition

A

As income rises, more is demand.

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6
Q

Price Elasticity of Demand

definition

A

Measures the responsiveness or sensitivity of the quantity demand to a change in price.

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7
Q

Factors affecting the PED

A
  • Availability of Substitues
  • Proportion of income spent on product
  • Nature of goods
  • Addictive consumption
  • Time period
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8
Q

Price Elasticity of Supply

A

Measures the responsiveness or sensitivity of the quantity supplied to a change in price

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9
Q

Factors affecting the PES

A
  • Availability of stocks
  • Stock hoarding ability
  • Price expectations
  • Time period
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10
Q

Cross Price Elasticity of Demand

A

Measures the responsiveness or sensitivity of the quantity demanded of one good to a change in price of another good.

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