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image UNIT :3 - Coggle Diagram
UNIT :3
Price Elasticity of Demand
The price elasticity coefficient formula
Using Averages
Interpretation of elasticity demand
Unit Elasticity( Ed<1)
Inelastic Demand (Ed=1)
Extreme cases (Ed=0)-Perfectly inelastic (Ed is infinity-perfectly elastic)
Using Percentages
Mid point formula
Elimination of minus sign
Elastic Demand ( Ed>1)
Total Revenue test
Unit Elasticity
Inelastic Demand
Elastic demand
Price Elasticity along a linear Demand curve
Price Elasticity and the Total-Revenue Curve
Determinates of price Elasticity of Demand
Substitutability
Proportiotion of income
Luxuries Versus necessities
Time
Application of price elasticity of demand
Excise taxes
Large Crop Yields
Decriminalization of illegal drugs
Price elasticity of supply
Supply elasticity coefficient formula
Inelastic Supply ( Es<1)
Unit elastic ( Es =1)
Perfectly inelastic( Es = 0)
Price elasticity of supply and time
Short run
Long run
Immediate market period
Application of price Elasticity of supply
Antiques (inelastic supply)
Reproductions ( more elastic supply)
Volatile gold prices (inelastic supply)
Cross Elasticity of Demand
Coefficient of cross elasticity of demand
Application of cross Elasticity of Demand
Company change Price
Government allow merger
Substitute Goods( Ewz>0)
Complementary Goods ( Ewz<0)
Independent Goods
Income Elasticity of demand
Coefficient of income elasticity of demand (Formula)
Normal Goods
Inferior Goods
Insights
Low or negative income elasticity
High income elasticities
Elasticity Is negative( Ei<0)
Elasticity is Positive ( Ei>0)
UNIT :3