PPT-1.2 Market 1.2.5 Income elasticity of demand

Edexcel Business Theme 1 Marketing and people Challenge What is meant by the term PED What is the formula for P ED State 2 factors influencing PED If a product has a PED of 07 would it be a good or bad idea to lower price Explain your answer. Mr. Barnett. University High. AP Economics. 2012-2013. Elasticity . We already know that if the price of a good rises, consumers will buy less. But….. how much . less?. Economists measure the change through . McGraw-Hill/Irwin. Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.. Elasticity. Issue: How responsive is the demand for . goods and services to . changes in . prices, . ceteris paribus. The concept of price elasticity of demand is useful here..  . Elasticity measures the degree of one variable’s dependence on another variable, or the “sensitivity” of one variable to a change in another variable. .  . While calculating elasticity, changes are expressed in relative (percentage) terms. . Price Elasticity of Demand (PED). Income Elasticity of Demand (YED). Cross-Price Elasticity of Demand . Price Elasticity of Supply. Elasticities. Possible test questions:. What factors determine the price and income . A measure of the responsiveness of one variable (usually quantity demanded or supplied) to a change in another variable. Most commonly used elasticity: price elasticity of demand, defined as:. Elasticity. Chapter 5. Outline. The Elasticity of Demand. Applications of Demand Elasticity. The Elasticity of Supply. Applications of Supply Elasticity. Using . Elasticities. for Quick . Predictions . Appendix . http://en.wikipedia.org/wiki/Coal_Strike_of_1902. 2. What is . e. d. . for Cigarettes?. “Economic studies have suggested that a price increase of 10 percent reduces smoking about 4 percent” . e. Chapter 3,4. Volatile oil prices . St. Louis Fed FRED database. . Prices and Production 1976-2013. BP Statistical Review of World Energy. . Laws of Supply and Demand. Supply and Demand Framework. A description of a market includes the quantity of goods that are sold in that market, . and Cross Elasticity. The responsiveness of one variable to changes in another. When price rises, what happens . to demand?. Demand falls. BUT!. How much does demand fall?. Elasticity – the concept. Elasticity of Demand describes the percentage change in . quantity demanded. that follows a price . change.. Elasticity of Demand. Demand is . Elastic. Demand is . Inelastic. . Change in Price. Large Change in . Fundamentals of. Consumer Choice. Fundamentals of Consumer Choice. Factors affecting choice. :. Limited income necessitates choice.. Consumers make choices purposefully.. One good can be substituted for another.. This web quiz may appear as two pages on tablets and laptops.. I recommend that you view it as one page by clicking on the open book icon at the bottom of the page.. Four Types of Elasticity (HOW MUCH?). THE LAW OF DEMAND TELLS US:. When price increases, the QUANTITY demanded decreases, and when prices decrease, the QUANTITY demanded increases.. Why does the . Qd. change?. Consider what happens when Oakland apartment rents increase:. ECONOMICS. and. MICROECONOMICS. Paul Krugman | Robin Wells. What is the definition of . elasticity?. What is the meaning and importance of:. price elasticity of demand?. income elasticity of demand?.