Chapter 3: Elasticities - Important Equations

Question	Answer
What is the formula for price elasticity of demand?	PED= Percentage change in quantity demanded/ Percentage change in price Image: c5a9b045-d9b5-4c11-b065-459a76876a5b (image/png)
What 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 Image: 19840669-73b1-497e-ae8f-560a9b88b3d7 (image/png)
What is the formula for income elasticity of demand? (YED)	YED= Percentage change in quantity demanded/Percentage change in income Image: 7d9ead7b-fe5f-41af-b899-4dbeb1320235 (image/png)
What 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.
What 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.
What is the formula for price elasticity of supply?	PES=Percentage change in quantity supplied/Percentage change in price Image: 16f12d86-5f2e-444a-895a-79ae50d7933f (image/png)

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	Created by Jasmine Wells almost 11 years ago