Category: Elasticities

• 3rd Jun 2022

  Income Elasticity of Demand (YED)

  

  Moving on to look at YED, we will see how demand varies with income and the types of relationships that a YED value can identify. Formally defined, YED, or income elasticity of demand, is the responsiveness of demand to a change in real income. It is calculated by the % change in demand over the…
• 2nd Jun 2022

  Price Elasticity of Supply (PES)

  

  Moving on to the final elasticity, we will look at the responsiveness of supply to changes in price – how much producers will change output in response to a price change. What is PES? As the name suggests, PES measures the responsiveness of supply to a change in price. All economic agents have one main…
• 31st May 2022

  Cross Elasticity of Demand (XED)

  

  Moving on to the final demand elasticity, we will look at XED – how the demand for one good varies based on the price of another. XED, or cross elasticity of demand, observes the responsiveness of demand of good A to a change in the price of good B. This allows us to assess the…
• 30th May 2022

  Price Elasticity of Demand (PED)

  

  Defining the first elasticity of demand: PED PED measures the responsiveness of demand to a change in the price level. As we already know, the demand curve is downwards sloping as at a higher price, consumers demand less of a good (due to diminishing marginal returns). However, this can vary depending on certain factors that…