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as economics unit 1

my exam is soon, im doing aqa spec, i dont understand any of elasticity can someone explain all the types of it please ? :confused:

... i really dont know why i chose this stupid subject :p:

my teachers really bad and hasnt come to most of the lessons so it doesnt help >_<

Reply 1

hamzab

Which Elasticities?

Price Elasticity? Elastic or Inelastic markets? Elastic demand curve, please elaborate so we can help further.

Reply 2

yoyo462001

All it is is measuring quantitatively how sensitive demand/supply of a good is with a change in Price. i.e. if you increase price will demand decrease by the same percentage or will it decrease by more or less.

Simplest way i can explain it. did that help?

Reply 3

Jordenfruitbat

hamzab

Which Elasticities?

Price Elasticity? Elastic or Inelastic markets? Elastic demand curve, please elaborate so we can help further.

just all of it lol :/

yeah that helped to give me a basic idea :smile:

im not sure how to approach a question on elasticity either.

oh found a question that i do not understand at all :P

"an airline announces that it is slashing fares on all its flights given a fare reduction of 35% what would be the expected percentage rise in demand for those flights if the company has estimated their price elasticity demand as -2.0?"

Reply 4

hamzab

Ok, take a normal good for instance. As income increases, demand for it increases, meaning supply should increase, resulting in it having a Price Elasticity of Supply at 1.

Give me an example of an elasticity question you are stuck on.

Reply 5

Jordenfruitbat

i have an elasticity question above now :smile:

you are

its not my fault i dont understand this stuff.. its the stupid teachers ive tried i cant teach it myself, and dont exactly understand what the question wants.

Reply 8

hamzab

ttocserp

you are

Extremely constructive comment there old chap! Now :snow:

off!

EDIT: If I had known you were such an Arrogant :snow:

I wouldn't have helped YOU at your time of need. Struggling to get a A in Business studies? Now that's just shameful prick!

Reply 9

hamzab

Jordenfruitbat

its not my fault i dont understand this stuff.. its the stupid teachers ive tried i cant teach it myself, and dont exactly understand what the question wants.

What textbook or Revision guide do you use mate?

Reply 10

THRASHx

Elasticity measures the responsiveness of something following a change in whatever.
Price elasticity of demand measures the responsiveness of demand following a change in price.
Income elasticity of demand measures the responsiveness of demand following a change in income.
You get the idea...

Also, an inelastic demand curve has a very steep gradient but dont use that term in an exam - always use inelastic and its worth mentioning how inelastic for a bit of evaluation.
An elastic demand curve has a very low gradient and is almost horizontal, again always use elastic in nature to describe it.

Any other help, just PM me.

Reply 11

Jordenfruitbat

i use an alain anderton textbook fifth edition.
thanks for the help thrash, that helped quite a bit :smile:

Reply 12

hamzab

Jordenfruitbat

i use an alain anderton textbook fifth edition.
thanks for the help thrash, that helped quite a bit :smile:

Thats the exact same book I use, big yellow one. They're the the best books out for Econ revision IMO.

Have you read through the elasticities chapters?

Reply 13

Jordenfruitbat

yeah thats the one... i did but i didnt understand it, i might have a read through in a bit now, thrash gave me a basic overview.

Reply 14

KaiserLim

http://www.youtube.com/user/pajholden?blend=1&ob=4

search for his videos. hope this helps

Reply 15

yunghamz

Jordenfruitbat

just all of it lol :/

yeah that helped to give me a basic idea :smile:

To work out that question you need to know the price elasticity of demand calculation. Basically its percentage change in QD( new QD-old QD/old QD)/percentage change in Price. This particular question is looking for the opposite of this as it already gives you what price elasticity of demand is (-2.0). You basically times that with the fare reduction which is -35. ( Remember to be careful of worded question they might include words such as reductions and falls which signal that the number is negative). So the answer should be -35 X -2.0 = 70. Hope this helps.