PED
It measures how much quantity demanded responds to a change in price.
What is price elasticity of demand?
It shows how responsive quantity supplied is to a price change.
What is price elasticity of supply?
It measures how demand responds to a change in consumer income.
What is income elasticity of demand?
This law states that as price rises, quantity demanded falls, ceteris paribus.
What is the law of demand?
It’s the difference between what consumers are willing to pay and what they actually pay.
What is consumer surplus?
When the value of PED is 0.3, demand shows this characteristic.
What is inelastic demand?
When PES is less than 1, supply is described this way.
What is inelastic?
A good with a negative YED falls into this category.
What is an inferior good?
A change in price causes this kind of movement on the demand curve.
What is a movement along the curve?
When price is below equilibrium, this market condition results.
What is a shortage?
Availability of substitutes and proportion of income spent are two of these.
What are determinants of PED?
Time period, spare capacity, and factor mobility are examples of these.
What are determinants of PES?
Goods with YED greater than 1 are described as these.
What are luxury goods?
Improved technology or lower costs cause this shift in the supply curve.
What is a rightward shift?
On a graph, equilibrium occurs at this point.
What is the intersection of supply and demand?
If price increases by 20% and quantity demanded falls by 40%, this is the PED value.
What is 2 (elastic)?
A firm that can easily ramp up output when prices rise has this type of supply.
What is elastic supply?
Income increases 10% and demand rises 5%; the YED equals this.
What is 0.5, a normal necessity?
When both supply and demand increase, equilibrium quantity does this.
What is increase?
Demand increases while supply stays constant — both price and quantity do this.
What is increase?
Luxury brands prefer this type of demand because they can raise prices without losing many customers.
What is inelastic demand?
Quantity rises 15% while price rises 5%. This is the elasticity value.
What is 3 (elastic)?
As income rises, spending on luxury cars increases faster than income
What is a high income-elastic (luxury) good?
If producers expect higher future prices, they may withhold output, shifting supply this way.
What is to the left?
When there is a shortage, prices tend to do this until equilibrium is restored.
What is rise?