elasticites of demand
- Created by: Sophie.ellenx
- Created on: 11-04-21 10:03
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- ___ of Demand
- PED
- significance of PED
- inelastic - passed onto consumer, but ineffective in reducing output but higher tax revenue for the government
- the more elastic - lower the incidence of tax - when ped is elasti - supplier will have to cover most the cost
- significance of PED
- YED
- responsivness of demand to a chnage in income - %change in QD/ %change income
- inferior good - YED< 0 - rise in income - fall in demand for good
- normal good - YED>0 - rise in income - rise in demad
- luxery good- YED>1
- normal good - YED>0 - rise in income - rise in demad
- inferior good - YED< 0 - rise in income - fall in demand for good
- significnce of YED
- how sales will be affected by income of pop
- impact type of goods a firm produces
- responsivness of demand to a chnage in income - %change in QD/ %change income
- XED
- responsivness of demand for one product (a) to chnage in price of another product (b)
- %chnage in QD of A/ % chnage in price of B
- significance - how price chnages by other firms will impact them
- subsitutes - XED>0 - inrease of price of good B will increase demand fr good A
- complements - XED< 0 increase in price of good B will decrease demand for good B
- unrelated goods - XED=)
- complements - XED< 0 increase in price of good B will decrease demand for good B
- subsitutes - XED>0 - inrease of price of good B will increase demand fr good A
- significance - how price chnages by other firms will impact them
- %chnage in QD of A/ % chnage in price of B
- responsivness of demand for one product (a) to chnage in price of another product (b)
- PED
- respeonsivness of demand to a change in the price of the good - % change in QD/ % chnage in price
- numercal values
- unitery elastic - PED=1 - quenity demanded changes bu exactly same % as price
- relatively elastic - PED>1 - quanitity demanded chnages by a larger % then price - demand is relatvely responsive to price
- perfectly elastic - PED=infinity - change in price means quanitity falls to 0 and demand is very responsive to price
- relativley inleastic - PED< 1 -quanitity demanded chnages by a smaller percentage than price - demand is realatively unresponsive to price
- prefectly inelastic = PED=0 a chnage in price has no effect on outout - demand is unresponsive to price
- relativley inleastic - PED< 1 -quanitity demanded chnages by a smaller percentage than price - demand is realatively unresponsive to price
- perfectly elastic - PED=infinity - change in price means quanitity falls to 0 and demand is very responsive to price
- relatively elastic - PED>1 - quanitity demanded chnages by a larger % then price - demand is relatvely responsive to price
- ___ of Demand
- PED
- significance of PED
- inelastic - passed onto consumer, but ineffective in reducing output but higher tax revenue for the government
- the more elastic - lower the incidence of tax - when ped is elasti - supplier will have to cover most the cost
- significance of PED
- YED
- responsivness of demand to a chnage in income - %change in QD/ %change income
- inferior good - YED< 0 - rise in income - fall in demand for good
- normal good - YED>0 - rise in income - rise in demad
- luxery good- YED>1
- normal good - YED>0 - rise in income - rise in demad
- inferior good - YED< 0 - rise in income - fall in demand for good
- significnce of YED
- how sales will be affected by income of pop
- impact type of goods a firm produces
- responsivness of demand to a chnage in income - %change in QD/ %change income
- XED
- responsivness of demand for one product (a) to chnage in price of another product (b)
- %chnage in QD of A/ % chnage in price of B
- significance - how price chnages by other firms will impact them
- subsitutes - XED>0 - inrease of price of good B will increase demand fr good A
- complements - XED< 0 increase in price of good B will decrease demand for good B
- unrelated goods - XED=)
- complements - XED< 0 increase in price of good B will decrease demand for good B
- subsitutes - XED>0 - inrease of price of good B will increase demand fr good A
- significance - how price chnages by other firms will impact them
- %chnage in QD of A/ % chnage in price of B
- responsivness of demand for one product (a) to chnage in price of another product (b)
- PED
- unitery elastic - PED=1 - quenity demanded changes bu exactly same % as price
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