ILO:
a) Understanding of price, income and cross elasticities of demand
b) Use formulae to calculate price, income and cross elasticities of demand
c) Interpret numerical values of:
o price elasticity of demand: unitary elastic, perfectly and relatively elastic, and perfectly and relatively inelastic
o income elasticity of demand: inferior, normal and luxury goods; relatively elastic and relatively inelastic
o cross elasticity of demand: substitutes, complementary and unrelated goods
d) The factors influencing elasticities of demand
e) The significance of elasticities of demand to firms and government in terms of:
o the imposition of indirect taxes and subsidies
o changes in real income
o changes in the prices of substitute and complementary goods
f) The relationship between price elasticity of demand and total revenue (including calculation)
a) Understanding of price, income and cross elasticities of demand
b) Use formulae to calculate price, income and cross elasticities of demand
c) Interpret numerical values of:
o price elasticity of demand: unitary elastic, perfectly and relatively elastic, and perfectly and relatively inelastic
o income elasticity of demand: inferior, normal and luxury goods; relatively elastic and relatively inelastic
o cross elasticity of demand: substitutes, complementary and unrelated goods
d) The factors influencing elasticities of demand
e) The significance of elasticities of demand to firms and government in terms of:
o the imposition of indirect taxes and subsidies
o changes in real income
o changes in the prices of substitute and complementary goods
f) The relationship between price elasticity of demand and total revenue (including calculation)
PED
Watch the revision video on PED to consolidate your understanding.
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Price Elasticity of Demand I A Level and IB Economics
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Price Elasticity of Demand - Examples of Low & High PED I A Level and IB Economics
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Revision video for calculation questions:
Price Elasticity of Demand - Two Example Calculations
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Examine two factors which will determine the PED for gyms. (8 marks) / Play to 3 min 50 sec
Coronavirus: can city gyms survive? | FT
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Importance PED for Firm
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Explain why estimating PED will be important for Tesco's?
Tesco: the supermarket price wars | IG
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Examine two ways a company like Apple can make its products more price inelastic. (8 marks)
This is iPhone 12 Pro — Apple
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Importance for Government
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Explain the importance of PED when considering a sugar tax for the Government? (5 marks)
Would a sugar tax even work? The facts you need to know - Alberto Nardelli | Comment is Free
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Explain why it is important that a Government know of PED when offering a subsidy? (5 marks)
Government Subsidies: Applied Examples I A Level and IB Economics
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Subsidy related articles:
Low-emission vehicles eligible for a plug-in grant Wireless electric car charging gets cash boost |
YED
Watch the revision webinars on YED to consolidate your knowledge:
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Income Elasticity of Demand - A Level and IB Economics
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Calculating Income Elasticity of Demand I A Level and IB Economics
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YED exam style questions
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Explain why knowledge of YED would be important to understand for a business on the high street? (5 marks)
How the recession has affected UK Towns and Cities
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Assess how important YED estimates are to luxury brands. (10 marks)
Why Luxury Brands Thrive In Recessions
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Assess how useful YED estimates would be to a firm considering exporting their G/S to another country. (10 marks)
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Appetite in China grows for luxury fashion brands
Additional reading:
Why do the Chinese love Bicester Village? |
Activity:
MCQ revision quiz
Kahoot YED quiz
MCQ revision quiz
Kahoot YED quiz
XED
Watch the revision video on XED
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Cross Price Elasticity of Demand
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Y1/IB 13) Cross Elasticity of Demand (XED)
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Explain how firms use XED within their own product portfolio. (5 marks)
Sneaky Ways Movie Theaters Get You To Spend More Money
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Assess how important XED would be for a supermarket to understand. (10 marks)
Wm Morrison price cut gamble
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