AS ECONOMICS

Saturday, February 5, 2022

4:25 PM
 

Q1. Distinguish between YED and CRED/XED and

explain how each is used to identify different types
of products. [08]
Q2. Discuss which of these two types of elasticity
would be more useful when predicting how a firm's
revenues would change as demand factors change
in a market economy. [12]
 
 

A1. concept of elasticity

definations of XED and YED
Concepts explain
Types of XED and YED
XED
5 types of XED
YED
5 types of YED
Formulas
XED= % change in qd of good a/%
change in price of good b
YED= % change in QD of good/%change
in income
 
YED
Normal good = direct relation between
income and qd of good.
Increase in income-increaASSE IN
demand. Vice versa
 
Inferior good=inverse relation between
income and qd of goods.
Increase in income-decrease in qd
Unrelated goods=no relation between
income and qd of goods.
i/D - no change in qd
 
 
 

Weak
Inelastic demand
 
Strong
Elastic demand
 

Normal goods
Inelastic-weak------ inelastic
Elastic--strong------elastic
 
Inferior goods
Same case as normal goods
 
Unrelated goods
 
 
XED
Complementary=jointly demanded
goods like bread annd butter
Inverse relation
X axis= qd of good b
Y axis= price of good a
Substitute goods=same level of
satisfaction like pepsi and coke
Direct relation
X axis= qd of good b
Y axis= price of good a
 
Unrelated goods=no relation
 
Concluding statement= these are the
different types of products that can be
identified with help of xed and yed.