the responsiveness of demand to a change in the price level. Formula: % change in quantity demanded/ % change in price
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Income elasticity of demand
the proportion to which demand changes when there is a change in income. Formula: % change in quantity demanded/ % change in income
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Substitutes
Goods that can be used as alternatives to another good e.g. bus and rail services or Mars bar and snickers. CLOSE substitutes are good alternatives whereas WEAK ones are not e.g. gas fired power and hydroelectric.
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Commodity
a good that is traded - usually raw materials or semi-manufactured goods that are traded in bulk e.g. tea, iron ore, oil or wheat. They are often unbranded goods (homogeneous) where all firms' products are very similar.
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Normal goods
Goods that will increase in demand when incomes rise
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Inferior goods
Goods that will decrease in demand when incomes rise
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Other cards in this set
Card 2
Front
the proportion to which demand changes when there is a change in income. Formula: % change in quantity demanded/ % change in income
Back
Income elasticity of demand
Card 3
Front
Goods that can be used as alternatives to another good e.g. bus and rail services or Mars bar and snickers. CLOSE substitutes are good alternatives whereas WEAK ones are not e.g. gas fired power and hydroelectric.
Back
Card 4
Front
a good that is traded - usually raw materials or semi-manufactured goods that are traded in bulk e.g. tea, iron ore, oil or wheat. They are often unbranded goods (homogeneous) where all firms' products are very similar.
Back
Card 5
Front
Goods that will increase in demand when incomes rise
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