Elasticity of Demand and Supply - Know Your Stuff! (Quizlet Activity)

Here are some key terms to revise!

• Elastic supply: When PES has a coefficient >1
• Factor making demand income elastic: Luxury / premium product e.g. designer clothing
• Factor making demand income inelastic: Staple product seem as a necessity e.g. toothpaste
• Factor making demand price elastic: Many close substitutes in a market and very low switching costs between competing brands
• Factor making demand price inelastic: High cost of switching supplier & habitual purchase
• Factor making supply price elastic: High level of unsold stocks
• Factor making supply price inelastic: Low level of spare production capacity
• Inelastic demand: When PED has a coefficient <1
• Perfectly elastic demand: A market with many perfect substitutes
• Perfectly elastic supply: When PES = infinity
• Perfectly inelastic demand: When PED = zero
• Unitary elasticity: When coefficient of elasticity = 1