Flashcards by laurenclement, updated more than 1 year ago
Created by laurenclement over 7 years ago



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Question Answer
Define Cross Price Elasticity of Demand (XPed) Cross elasticity of demand measures the responsiveness of demand for good X following a change in price of good Y Formula= %change in demand for good X __________________________ % change in price of good Y
Define Income Elasticity of Demand (Yed) Income elasticity of demand measures the relationship between a change in quantity demanded for good X and a change in income Formula= % change in demand _________________________ % change in income
Define Price Elasticity of Supply (Pes) Price elasticity of supply measures the relationship between change in quantity supplied and a change in price Formula= % change in quantity supplied ________________________ % change in price
Define Price elasticity of Demand (Ped) Price elasticity of demand measures the responsiveness of demand for a product following a change in it's own price Formula= %change in quantity demanded _________________________ % change in price
Define the term Demand Demand is the quantity of a good or sevice that consumers are both willing and able to buy at a given price in a given time period
Putline the relationship between price and demand There is an inverse relationship between the price of a good and demand for it. As price falls, demand rises and as price rises, demand falls.
What is the Economic Problem? The basic problem is the fact their are unlimited wants which leads to scarce/finite resources which leaves with having to make a choice by asking three fundimental questions; what is produced? how is it produced? and who receives what is produced? The answer to these then creates an opportunity cost, so it is how society usues it's scarce resources.
What are the factors of production? The factors of production is a term used in economics to categorise resources. These are; Land Capital Enterprise Labour
Define the term Externalities An externality is any economic activity that has external costs and benefits. The price mechanism fails to fully take them into account. They are impacts on 3rd parties of activity.
Define the term Scarcity A situation where there are insufficient resources to create all the products to meet all unlimited wants
Define the term Opportunity Cost An opportunity cost is the best alternative forgone when making an economic decision
Define the term Supply The quantity of a product that a producer is willing and able to supply onto the market at a given price in a given time period
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