Ch. 6

• What does elasticity measure in economics?

  Sensitivity of one variable to changes in another
• What is price elasticity of demand (PED)?

  Sensitivity of quantity demanded to price changes
• When is demand considered elastic?

  When PED is greater than 1
• When is demand considered inelastic?

  When PED is less than 1
• What does unit elastic demand mean?

  PED equals 1
• What is income elasticity of demand (YED)?

  Sensitivity of quantity demanded to income changes
• What is a superior good?

  Good with positive YED greater than 1
• What does cross elasticity of demand (XED) measure?

  Sensitivity of quantity demanded to another good's price
• What is price elasticity of supply (PES)?

  Sensitivity of quantity supplied to price changes
• What is perfectly inelastic supply?

  Supply elasticity is zero
• What is perfectly elastic supply?

  Supply elasticity is infinite
• What are the key types of elasticity in economics?

  • Price elasticity of demand (PED)
  • Income elasticity of demand (YED)
  • Cross elasticity of demand (XED)
  • Price elasticity of supply (PES)
• What are the classifications of price elasticity of demand?

  • Elastic: PED > 1
  • Inelastic: PED < 1
  • Unit elastic: PED = 1
• What are the classifications of supply elasticity?

  • Perfectly inelastic: PES = 0
  • Perfectly elastic: PES = ∞