U2 M48 Other Important Elasticities

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14 Terms

1
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Price Elasticity of Supply

Shows how sensitive producers are to a change in price.

2
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<p>What kind of elasticity is shown here?</p>

What kind of elasticity is shown here?

Perfectly Inelastic

<p>Perfectly Inelastic</p>
3
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<p>What kind of elasticity is shown here?</p>

What kind of elasticity is shown here?

Relatively Inelastic

<p>Relatively Inelastic</p>
4
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<p>What kind of elasticity is shown here?</p>

What kind of elasticity is shown here?

Unit Elastic

<p>Unit Elastic</p>
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<p>What kind of elasticity is shown here?</p>

What kind of elasticity is shown here?

Relatively Elastic

<p>Relatively Elastic</p>
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<p>What kind of elasticity is shown here?</p>

What kind of elasticity is shown here?

Perfectly Elastic

<p>Perfectly Elastic</p>
7
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What is Cross-Price Elasticity of Demand

shows how sensitive a product is to a change in price of another good (shows whether goods are substitutes or complements)

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If cross-price elasticity of demand is positive what are the goods

substitutes

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If cross-price elasticity of demand is negative what are the goods

complements

10
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Formula for cross-price elasticity of demand

remember price is always in the denominator

<p>remember price is always in the denominator</p>
11
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What is Income elasticity of demand

Shows how sensitive a product is to a change in INCOME

It shows if goods are normal or inferior

12
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Income elasticity of demand formula

income on the bottom

<p>income on the bottom</p>
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If income elasticity of demand is positive what does it mean

good is a normal good

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If income elasticity of demand is negative what does it mean

good is an inferior good