3.3 business equations

Front

price elasticity =

Back

% change in demand / %change in price

Front

under 1

1

more than 1

price elasticity meaning

Back

under 1 - inelastic (less responsive, change in demand is less than change in price)

1 - change in demand = change in price

more than 1 = elastic change in demand is more than the change in price

Front

Income elasticity of demand (YED) =

Back

% change in quality demanded / change in income

Front

+0.5

+1.5

-0.5 =

Back

normal good

normal luxury

inferior good