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How should I write the definitions of the different elasticities in an exam?

The first thing you should do is determine which elasticity you are being asked.

There are four different types of elasticities:

1. PED = Price Elasticity of Demand

2. YED = Income Elasticity of Demand

3. XED = Cross Elasticity of Demand

4. PES = Price Elasticity of Supply

Once you are clear which elasticity you are being asked about, write the full definition and the calculation as demonstrated below. If the question includes values, plug in the values and show your working out. 

Definitions and Calculations:

1. PED = Price Elasticity of Demand

PED measures the responsiveness or sensitivity of demand for a good due to a change in price.

PED = % change in Quantity Demand / % change in Price

2. YED = Income Elasticity of Demand

YED measures the responsiveness of demand for a good due to a change in income. 

YED = % change in Quantity Demand / % change in income

3. XED = Cross Elasticity of Demand

 XED measures the responsiveness in demand for good B due to a change in price of good A 

XED = % change in Quantity Demand of B / % change in Price of A

4. PES = Price Elasticity of Supply

 PES measures the responsiveness of supply due to a change in  price 

PES = % change in Quantity Supply / % change in Price

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