![]() Section 1.4 Market failure - simulations and activities.1.3 Government intervention - simulations and activities.1.3 Government intervention - questions.Section 1.2 Elasticities - simulations and activities.Elasticity along a straight line demand curve. ![]() 1.1 Competitive markets - simulations and activities.1.1 Competitive Markets: Demand and Supply - notes.1.1 Competitive Markets: Demand and Supply.Topic pack - Microeconomics - introduction.If mask prices increase by 100% but quantity supplied only increases by 10%, PES is +10%/+100% = 0.1 meaning mask producers are unable to increase quantity of masks supplied in the market, and PES is inelastic. In general, producers produce more when market prices are high – more masks are produced in an epidemic as people pay a high price for it. – PES is used to assess how responsive producers in a market are to price changes. This makes both the percentage change in Qa and Pb positive, vice versa. This is because a rise in the price of fidget spinners cause people to buy less fidget spinners (due to the price hike) and buy more fidget cubes. fidget spinners and fidget cubes), they will have positive XED. If they are substitutes of one another (e.g. – XED is used to assess the relationship between two goods. If a 10% increase in income leads to a 20% fall in quantity demanded for SPAM, YED is -20%/+10% = -2, meaning it is an inferior good, making YED negative. You would most likely buy less canned food like SPAM or corned beef if you win the lottery ( which people have been hoarding), as you will be eating at Michelin starred restaurants. – YED measures whether we will buy more or less of a certain good if we get richer. Necessities tend to have inelastic PED as you buy a similar amount despite price changes – see Elasticity and Oil Prices. A PED of 1 is elastic (note PED is always negative, but we ignore the minus sign). This means a small decrease in price lead to a much larger quantity purchased, and the good has elastic PED. If prices for plush teddies fall by 10%, but quantity demanded rises by 20%, then the PED is +20%/-10% = -2. – PED measures how much more of the good would people buy if there is a price reduction, vice versa. Want a closer look? Download these elasticity notes here. ![]() PED = %∆Qd / %∆P = Percentage Change in Quantity Supplied / Percentage Change in Price Elasticity Notes with Calculations ![]() – Price Elasticity of Supply (PES) measures how sensitive a change in quantity supplied (Qs) is, as a response to a change in price (P) YED = %∆Qa / %∆Pb = Percentage Change in Quantity Demanded for Good A / Percentage Change in Price for Good B – Cross Elasticity of Demand (XED) measures how sensitive a change in quantity demanded (Qa) for Good A is, as a response to a change in price for Good B (Pb) YED = %∆Qd / %∆Y = Percentage Change in Quantity Demanded / Percentage Change in Income – Income Elasticity of Demand (YED) measures how sensitive a change in quantity demanded (Qd) is, as a response to a change in household incomes (Y) PED = %∆Qd / %∆P = Percentage Change in Quantity Demanded / Percentage Change in Price – Price Elasticity of Demand (PED) measures how sensitive a change in quantity demanded (Qd) is, in response to a price change (P) Relevant Exam Boards: A-Level (Edexcel, OCR, AQA, Eduqas, WJEC), IB, IAL, CIEĮdexcel Economics Notes Directory | AQA Economics Notes Directory | IB Economics Notes Directory
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