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

AS
Answered by Amber S. Economics tutor

1833 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What is the effect of an increase in supply on the economy?


What is protectionism?


I'm unsure how to structure my essay, which way is the best?


How do you calculate Price Elasticity of Demand


We're here to help

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

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences