AP Micro - Income & cross-price elasticity

inelastic

inelastic

income changes and demand does not

elastic

income changes and demand also does

inelastic (#)

elasticity is less than 1

elastic (#)

elasticity is greater than 1

normal good

income and Q_D both increase/decrease

inferior good

income and Q_D move in opposite directions

complementary goods

cross-price elasticity is negative

substitutes

cross-price elasticity is positive

example of complements

“batteries not included” (goods bought together)

example of substitutes

“buy this dupe!” (goods bought instead of another)

cross-price elasticity

measure of how much Q_D responds to the price of another good

income elasticity

measure of how much Q_D changes when price changes (there is a change in income)