click below

click below

Normal Size Small Size show me how

# Elasticity

### Key words and definitions for elasticity of demand for Leaving Certificate

Term | Definition |
---|---|

1. Income Elasticity of Demand (YED) | Measures the percentage / proportionate change in the demand for a good caused by the percentage / proportionate change in income. |

2. Formula for Income Elasticity of Demand | (Y1 + Y2 / Q1 + Q2) x (change Q / change Y) |

3. Price Elasticity of Demand (PED) | Measures the percentage / proportionate change in the demand for a good caused by the percentage / proportionate change in the price of that good. |

4. Formula for Price Elasticity of Demand | (P1 + P2 / Q1 + Q2) x ( change Q / change P) |

5. Cross elasticity of demand | Measures the percentage / proportionate change in the demand for one good, caused by the percentage / proportionate change in the price of other goods. |

6. Formula for Cross Elasticity of Demand | (P(A)1 + P(A)2 / Q(B)1 + Q(B)2) x (change Q(B) / change P(A)) |

7. Perfectly elastic demand. | Occurs when consumers are prepared to buy all they can of a good at a given price, while any increase in price above this given price will result in quantity demanded to fall to zero. This is represented by a horizontal demand curve. |

8. Perfectly Inelastic Demand. | The percentage change in price causes no change in the quantity demanded. This is represented by a vertical demand curve. |

9. Elastic demand | The percentage change in demand is greater than the percentage change in the price of the good. |

10. Inelastic demand | The percentage change in demand is less than the percentage change in the price of the good |

11. Unitary elastic demand. | The percentage change in demand is equal to the percentage change in the price of the good. |