Demand and Supply (Edexcel A-Level Economics A): Flashcards

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Elasticity
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Definition of elasticity in economics

Measures how sensitive one variable is to changes in another

PED formula

% change in quantity demanded% change in price\frac{\% \text{ change in quantity demanded}}{\% \text{ change in price}}

PED > 1 classification (ignoring sign)

Price elastic demand

PED < 1 classification (ignoring sign)

Price inelastic demand

Most important factor affecting PED

Availability of substitutes

Effect on total revenue when price falls & demand is elastic

Total revenue rises

YED sign for normal goods

Positive (demand increases as income rises)

YED sign for inferior goods

Negative (demand falls as income rises)

XED sign for substitute goods

Positive

XED sign for complementary goods

Negative

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The Nature of Economics

Demand and Supply

How Markets Work

Market Failure

Government Intervention and Failure

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The Nature of Economics

Demand and Supply

How Markets Work

Market Failure

Government Intervention and Failure

Explore Edexcel A-Level Economics A Quizzes by Topics

The Nature of Economics

Demand and Supply

How Markets Work

Market Failure

Government Intervention and Failure

Explore Edexcel A-Level Economics A Exam Questions by Topics

The Nature of Economics

Demand and Supply

How Markets Work

Market Failure

Government Intervention and Failure

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