Price Elasticity of Demand (HSC SSCE Economics): Flashcards
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Price elasticity of demand (PED) measures
Price elasticity of demand (PED) measures
Consumer responsiveness to price changes
Elastic demand characteristic
Elastic demand characteristic
% change in quantity > % change in price
Inelastic demand characteristic
Inelastic demand characteristic
% change in quantity < % change in price
Unit elastic demand characteristic
Unit elastic demand characteristic
% change in quantity = % change in price
Total outlay method: inelastic demand sign
Total outlay method: inelastic demand sign
Price and total outlay move in same direction
Total outlay method: elastic demand sign
Total outlay method: elastic demand sign
Price and total outlay move in opposite directions
Effect of many substitutes on demand elasticity
Effect of many substitutes on demand elasticity
Makes demand more elastic
Elasticity of necessities vs luxuries
Elasticity of necessities vs luxuries
Necessities: inelastic; Luxuries: elastic
How time affects elasticity after price change
How time affects elasticity after price change
Elasticity increases as consumers adjust behaviour
Why governments tax inelastic demand goods
Why governments tax inelastic demand goods
Ensures stable tax revenue despite price rises