Studied by 0 peoplePrice Elasticity of Demand (PED)
The degree of responsiveness of the quantity demanded of a product when there is a change in price.
Elastic PED (-1 ←→ -∞)
When a change in price causes a proportionally larger change in quantity demanded.
Unit Elastic PED(-1)
When a change in price causes a proportional change in quantity demanded.
Inelastic PED (0 ←→ -1)
When a change in price causes a proportionally smaller change in quantity demanded.
Perfectly Elastic PED (-∞)
Any change in the price, the demand falls to 0
Perfectly Inelastic PED (0)
A change in the price causes no change in quantity demanded.
Price Elasticity of Supply (PES)
The degree of responsiveness of the quantity supplied of a product when there is a change in price.
Elastic PES (>1)
When a change in price causes a proportionally larger change in quantity supplied.
Unit Elastic PES (1)
When a change in price causes a proportional change in quantity supplied.
Perfectly Inelastic PES (0)
Any change in price will cause no change in quantity supplied.
Inelastic PES (0 ←→ 1)
When a change in price causes a proportionally smaller change in quantity supplied.
Perfectly Elastic PES (∞)
Infinite quantity supplied at a given price, but none at a lower price.
Income Elasticity of Demand
The degree of responsiveness of the quantity demanded of a product when there is a change in income.
Inferior Good (<0)
A change in income causes a decrease in quantity demanded.
Income-Inelastic; Necessity (0 ←→ 1)
A change in income causes a proportionally smaller change in quantity demanded.
Income-Elastic; Luxury (>1)
A change in income causes a proportionally larger change in quantity demanded.
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