2.2 Price elasticity, income elasticity and cross elasticity of demandSyllabus9708–2026–2027Topic2.2Level—
What you’ll learn8 learning objectivesChoose one objective for a focused lesson, or study the complete topic.2.2.1PED, YED and XED• Definition of price elasticity, income elasticity and cross elasticity of demand (PED, YED, XED)Syllabus objective2.2.2Elasticity formulae• Formulae for and calculation of price elasticity, income elasticity and cross elasticity of demandSyllabus objective2.2.3Elasticity coefficients• Significance of relative percentage changes, the size and sign of the coefficient of:- price elasticity of demand- income elasticity of demand- cross elasticity of demandSyllabus objective2.2.4Elasticity values• Descriptions of elasticity values: perfectly elastic, (highly) elastic, unitary elasticity, (highly) inelastic, perfectly inelasticSyllabus objective2.2.5PED on straight-line demand• Variation in price elasticity of demand along the length of a straight-line demand curveSyllabus objective2.2.6Elasticity determinants• Factors affecting:- price elasticity of demand- income elasticity of demand- cross elasticity of demandSyllabus objective2.2.7PED and total expenditure• Relationship between price elasticity of demand and total expenditure on a productSyllabus objective2.2.8Elasticity and decision-making• Implications for decision-making of price elasticity, income elasticity and cross elasticity of demandSyllabus objective