The Consumer (Demand) (Leaving Cert Economics): Flashcards

Rewards encouraging certain purchasing decisions

Costs/penalties discouraging specific behaviours

90% reduction in use in first year

Makes decisions maximising satisfaction (utility)

Consumer satisfaction

Measures demand sensitivity to price changes

$\frac{\% \Delta Qd}{\% \Delta P}$

$PED > 1$, demand responds strongly to price

$PED < 1$, demand barely responds to price

Measures demand sensitivity to income changes

$\frac{\% \Delta Qd}{\% \Delta Y}$

$YED > 0$, demand increases as income rises

$YED < 0$, demand decreases as income rises

$YED > 1$, demand rises more than proportionally w/ income

Housing, rent, and energy costs