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

2184 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

How are interest rates used by the Monetary Policy Committee to control inflation?


Define the term "elastic demand"


The Government would like to improve the well-being of the population by encouraging people to adopt a healthy diet. Using your knowledge of both traditional economic theory and behavioural economics, assess alternative policies that the Government might


Define the term ‘public good’ and explain why public goods suffer from the ‘free rider’ problem.


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2025 by IXL Learning