PED, YED, XED Classifications

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Presentation transcript:

PED, YED, XED Classifications Carter Waterkeyn AICE ECONOMICS 2016-2017

PED PED > 1 Luxury PED< 1 Necessity PED= close to infinite is perfectly elastic PED> 1 Relative Elastic PED= 1 Unitary elastic PED< 1 Relatively Inelastic PED= 0 Perfectly Inelastic

Objective 1: Income elasticity – a summary Income elasticity of demand > 1 Normal, luxury good Income elastic Income elasticity of demand is a positive number less than 1. Normal, necessity Income inelastic Income elasticity = 1 Normal Unit income elastic Income elasticity of demand is a a negative number. Inferior good

Objective 1: Cross Price elasticity – a summary Cross price elasticity of demand between X and Y is a positive number. X and Y are substitutes Cross price elasticity of demand between X and Y is a negative number. X and Y are complements Cross price elasticity of demand between X and Y is zero. X and Y are unrelated