![]() The PED for a good is negative due to the law of demand and the common practice among economists is to drop the negative sign. There are different implications of the values of PED, YED and XED. % Δ Price of Good B Interpretation of the Values of PED, YED and XED Suppose that the two goods are good A and good B. The XED for a good with respect to another good is a measure of the degree of responsiveness of the demand for the first good to a change in the price of the second good, ceteris paribus. The YED for a good is a measure of the degree of responsiveness of the demand to a change in income, ceteris paribus. The PED for a good is a measure of the degree of responsiveness of the quantity demanded to a change in the price, ceteris paribus. There are different definitions and formulas for PED, YED and XED. There are three concepts of elasticity of demand each relating to one of the determinants of demand: price elasticity of demand (PED), income elasticity of demand (YED) and cross elasticity of demand (XED). (a) The elasticity of demand for a good is a measure of the degree of responsiveness of the quantity demanded or the demand to a change in a determinant of demand, ceteris paribus. (b) Discuss the usefulness of the concepts of elasticity of demand to a firm that produces a fashionable product. (a) Distinguish between the concepts of price elasticity of demand, income elasticity of demand and cross elasticity of demand. In our regular economics lesson, we will be using simple yet engaging explanations like these to illustrate economics concepts.This question will be discussed in economics tuition in the fifth week of term 1. So now after going through all these, can you also explain why there are significantly more movie screening in the theatre during Chinese New Year Period? This is because students like yourselves will be receiving alot of Ang Baos and contributing them to shows filmed by Jacky Chan! Oh yes, lastly, ever wondered why issit YED and not IED? It is because Economist like to use Y to denote income □ Because of the nature of iPhone (luxury goods), an increase in Chinese’s income will lead to a more than proportionate increase in iPhone in China! That is why Apple is busy building iPhone and iPad Assembly Plants in China! Or issit the poverty – stricken North Korea? So why should you know about YED? For example, if you are Steve Jobs, where will you open your next Apple Store? Is it the up & coming China? ![]() Imagine receiving your first huge bonus from your job. A 1% increase in your consumption will lead to more than 1% increase in buying of LV bags. YED 1 – Luxury Good i.e Luxury bags like LV.Let us try to identify & simplify the complex numbers above! Favourite questions involve “role-playing” as a business owner and how does YED relates to your business decision. Essays – You are expected to identify these goods as inferior / necessity / luxury good respectively and apply economics analysis. Case Studies – you may be tested on the definition and interpretation of tables with all these numerical examples Ģ. So what does all this confusing signs mean? And how does it apply to my a level econs essays / case studies?ġ. ![]()
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