Micro economics Definitions AQA A level Economics Exam Questions and Answers |Complete
Solutions Graded A+ |100% Correct
Disequilibrium a combination of price and quantity traded which has a tendency to change
for given demand and supply conditions
joint demand When the demand for one product increases the demand for another.
Joint supply when one good is produced, another good is also produced from the same raw
materials
derived demand demand for a product which is demanded only because of demand for final
;product it contributes to
composite demand Where a good is demanded for two or more separate uses
price elasticity of demand the responsiveness of quantity demanded to a change in price
PED = % change in quantity demanded / % change in price
If PED is greater than 1 (ignore minus) demand is relatively elastic
If PED less than 1 (ignore minus) demand is relatively inelastic
income elasticity of demand The responsiveness of demand to a change in income
YED % change in quantity demanded / % change in income
If YED is positive normal good
, If YED negative inferior good
cross elasticity of demand the responsiveness of the demand for one good to a change in
the price of another good
XED % change in QD of good A / % change in price of good B
If XED is negative complementary good
if XED positive value substitute good
if XED is zero unrelated goods
Elasticity of supply The responsiveness of quantity supplied to a change in price
PES % change in quantity supplied/ % change in price
Normal good a good that consumers demand more of when their incomes increase
inferior good a good that consumers demand less of when their incomes increase
substitute good Good which is an alternative to a particular good from the consumer's point
of view
income money earned over a period of time eg wages
Solutions Graded A+ |100% Correct
Disequilibrium a combination of price and quantity traded which has a tendency to change
for given demand and supply conditions
joint demand When the demand for one product increases the demand for another.
Joint supply when one good is produced, another good is also produced from the same raw
materials
derived demand demand for a product which is demanded only because of demand for final
;product it contributes to
composite demand Where a good is demanded for two or more separate uses
price elasticity of demand the responsiveness of quantity demanded to a change in price
PED = % change in quantity demanded / % change in price
If PED is greater than 1 (ignore minus) demand is relatively elastic
If PED less than 1 (ignore minus) demand is relatively inelastic
income elasticity of demand The responsiveness of demand to a change in income
YED % change in quantity demanded / % change in income
If YED is positive normal good
, If YED negative inferior good
cross elasticity of demand the responsiveness of the demand for one good to a change in
the price of another good
XED % change in QD of good A / % change in price of good B
If XED is negative complementary good
if XED positive value substitute good
if XED is zero unrelated goods
Elasticity of supply The responsiveness of quantity supplied to a change in price
PES % change in quantity supplied/ % change in price
Normal good a good that consumers demand more of when their incomes increase
inferior good a good that consumers demand less of when their incomes increase
substitute good Good which is an alternative to a particular good from the consumer's point
of view
income money earned over a period of time eg wages
