price elasticity

Cards (23)

  • what is price elasticity of demand
    the responsiveness of quantity demanded of a good/service to a change in price
  • how to calculate Price elasticity of demand
    % change in quantity of demand / % change in price
  • why is the price elasticity of demand always negative

    due to the law of demand where the quantity of demand and price have an inverse relationship
  • what value is at perfectly inelastic
    0
  • what value is at inelastic
    <1
  • what value is at unitary
    -1
  • what value is at elastic
    >1
  • what value is at perfectly elastic
    infinity
  • what are the determinants of price elasticity of demand
    proportion of income spent, necessity, definition, brand loyalty, availability of substitutes, time, habit forming goods
  • what is price elasticity of supply
    measures the responsiveness of quantity supplied of a good or service to a change in price
  • how to calculate price elasticity of supply

    % change in quantity supplied / % change in price
  • why is price elasticity of supply always positive

    as there is a positive relationship between quantity supplied and price
  • what are the determinants of price elasticity of supply
    Time, availability of stock, spare capacity
  • what is income elasticity of demand
    measures the responsiveness of quantity demanded due to a change in income
  • when income is positive what is in demand

    normal goods
  • when income is negative, what is in demand

    inferoir goods
  • what type of good is inelastic
    necessity
  • what type of good is elastic
    luxury
  • what is cross elasticity of demand
    measures the responsiveness of quantity demanded of good a to the change of price in good b
  • how to calculate XED
    % change in quantity demanded of good a / % change in price of good b
  • what type of good is it if XED is negative

    complimentary good
  • what type of good is it if XED is positive

    Substitute goods
  • how can price elasticity of demand be useful for producers
    price strategies on firms, price volatility in a market following changes in supply, the effect of a change in indirect tax on price and quantity demanded.