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6832161
Economics- Elasticity
Description
Mind Map Defining and Explaining Elasticity of Demand
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ped
yed
xed
economics
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Mind Map by
Ellis Clague
, updated more than 1 year ago
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Created by
Ellis Clague
almost 8 years ago
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Resource summary
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
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
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
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
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.
More than 0= Substitutes
Substitutes means Competing goods
Figure size: Less than one=Weak relationship More than one=Strong relationship
0=No relationship
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