supply and demand
what is supply
the willingness to produce goods and services based off a profit incentive
what is demand
the amount of goods and services desired by those who can afford them
what does price elasticity measure
the responsiveness of demand to a change in price
what is the equation for PED
%change in quantity/ %change in price
is the PED always positive or negative
negative
how do you know if a PED is elastic
it is greater than one
how do you know if a PED is inelastic
it is less than one
what is a PED if it is one
it is unitary/unit elastic
give 4 reasons why elasticity differ
number of subsitute goods, time, consumer knowledge, disposable income
explain why elasticty differs (number of subsitute goods)
the more competition, the more elastic
explain why elasticty differs (disposable income)
the more income available, the more inelastic demand will be
explain why elasticty differs (consumer knowledge)
the more consumer knowledge the consumer has, the most elastic demand will be
explain why elasticty differs (time)
the more time a consumer has to make a decision, the more elastic demand will be