6832161
Description
Mind Map by Ellis Clague, updated more than 1 year ago
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Created by Ellis Clague
over 7 years ago
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|
Economics-
Elasticity
- PED- Price
Elasticity Of
Demand
- Formula=Percentage change in quantity demanded
Percentage change in price
- Always
Negative
- Less than 1=Price Inelastic
More than 1=Price elastic
0=Perfectly Inelastic
∞=Perfectly Elastic
-1=Unitary Elastic
- Definiton-A measure of the sensitivity of
quantity demanded to a change
in the price of a good or service.
- Factors affecting PED:
Availability of subsitutes,
Addictiveness of a product,
Time, Income spent on good
- Formula=Percentage change in quantity demanded
Percentage change in price
- YED- Income
Elasticity Of
Demand
- Positive= Normal
Good
- 0 to +1= Income inelastic-
Goods for which a change
in income produces a less
than proportionate
change in demand
- +1 to ∞=Income elastic-
Goods for which a change
in income produces a
greater proportionate
change in demand
- 0 to +1= Income inelastic-
Goods for which a change
in income produces a less
than proportionate
change in demand
- Negative= Inferior
Good
- An inferior good is a good that we buy because we
have too, this is because we don't have sufficient
income to buy better versions of the good
- As income rises demand for the product descreases
- An inferior good is a good that we buy because we
have too, this is because we don't have sufficient
income to buy better versions of the good
- Formula=Percentage change in quantity demanded
Percentage change in consumer income
- Definition- A measure of
the sensitivity of quantity
demanded to a change in
consumer incomes
- Positive= Normal
Good
- XED- Cross
Elasticity Of
Demand
- Definition- A measure of the
sensitivity of quantity
demanded of a good or service
to a change in the price of
some other goods or services
- Formula- Percentage change in quantity demanded of good A
Percentage change in price of good B
- Less than 0= Complement
- Complement means Goods for
which there is joint demand.
- Complement means Goods for
which there is joint demand.
- More than 0= Substitutes
- Substitutes means Competing goods
- Substitutes means Competing goods
- Figure size: Less
than one=Weak
relationship More
than one=Strong
relationship
- 0=No relationship
- Definition- A measure of the
sensitivity of quantity
demanded of a good or service
to a change in the price of
some other goods or services
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