Flashcards
Chapter 3: Elasticities - Important Equations
Cards in this deck (6)
- 1What is the formula for price elasticity of demand?PED= Percentage change in quantity demanded/ Percentage change in price
- 2What is the formula for cross price elasticity of demand? (XED)XED= Percentage change in quantity demanded of good X/ Percentage change in price of good Y
- 3What is the formula for income elasticity of demand? (YED)YED= Percentage change in quantity demanded/Percentage change in income
- 4What does it indicate if YED<1 ?Usually occurs for necessities goods.
If a good has a YED that is positive but less than one, it has income inelastic demand. - 5What does it indicate if YED>1?Usually applies to luxury goods.
If a good has a YED that is greater than one, it has income elastic demand. - 6What is the formula for price elasticity of supply?PES=Percentage change in quantity supplied/Percentage change in price
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- International Baccalaureate Economics (Important equations) Flashcards on Chapter 3: Elasticities - Important Equations, created by Jasmine Wells on 30/11/2015.
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