How to answer elasticity questions

Answering Elasticity questions: 
Using technique DEED as for all other questionsD- define E- explain E- example D- diagram
YED = % Change in demand divided by the % change in income

1. Identify wether the good is normal or inferior and define why it is this typeNormal good = increase income, increase quantity demanded (eg. petrol/clothing)Inferior good = increase income, decrease quantity demanded (eg. Tesco value chocolate)Luxury good = increase income, increase % of income spent (eg. HD TV)
2. Diagram + explanation
XED = % Change in price of good A divided by the % change in quantity demanded for good B
1. Identify wether the good is a complement or a substitute and define why it is this typeComplement good = if the price of good A increases, quantity demanded of good B also increases  if the price of good A falls, quantity demanded of good B also falls (eg. Tennis rackets and tennis balls)Substitue good = if the price of good A increases, quantity demanded of good B falls if the price of good A falls, quantity demanded of good B increases (eg. Tea and coffee)
2. Diagram + explaination

Answered by Amber S. Economics tutor

1482 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Explain reasons why a firm would want to merge with another firm in the same industry.


How does business confidence affect the economic cycle? And why?


What is a balance of payments deficit and why might this be damaging to the economy?


Define what is meant by GDP, and explain the limitations of using it as a proxy for economic growth.


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo
Cookie Preferences