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### How do I work out the different elasticites of demand?

Elasticity is the proportionate responsiveness of a second variable to an initial change in the first variable.

There are four different types of elasticites:

1. PED = Price Elasticity of Demand

2. YED = Income Elasticity of Demand

3. XED = Cross Elasticity of Demand

4. PES = Price Elasticity of Supply

Definitions and Calculations:

1. PED measures the extent to which the demand for a good changes in response to a change in the price of that good.

PED = % change in Qd / % change in P

2. YED measures the extent to which the demand for a good changes in response to a change in income.

YED = % change in Qd / % change in income

3. XED measures the extent to which the demand for good A changes in response to a change in the price of good B,

XED = % change in Qd of A / % change in P of B

4. PES measures the extent to which the supply of a good changes in response to a change in the price of that good.

PES = % change in Qs / % change in P

1 year ago

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