DDSS

Question 1

DD

Answer 1

qty of a good that consumer is both w&a to buy at each possible price during a given period of time, cp

Question 2

SS

Answer 2

Qty of a good that a producer is both w&a to sell at each possible price during a given time period, cp

Question 3

PED

Answer 3

measures responsiveness of the Qdd of a good to a change in its price, cp

Question 4

PES

Answer 4

measures responsiveness of Qss of a good to change in its prices, cp

Question 5

YED

Answer 5

measures degree of responsiveness of the DD for a good to a change in its income, cp

YED>0 : normal good(<1 necessity, >1 luxury)
YED<0 : inferior

Question 6

XED

Answer 6

measure of the degree of responsiveness of the DD for one good to a change in the price of another good, cp

substitutes: XED>0
complements: XED<0
weak: <1, strong>1

Question 6

Signalling function

Answer 6

Market prices will adjust to demonstrate where resources are required

Question 7

Incentivising function

Answer 7

When DD is high and strong in a particular good/industry → ↑market prices act as incentives for producers to ↑o/p

Question 8

Rationing function

Answer 8

Producers Ration out limited goods only to those w&a of c/r to pay → buyers who desire the good and can afford to pay the price obtain the item and those unable to, go w/o

Question 9

c/r surplus

Answer 9

difference b/w the max P c/r are w&a to pay and the P they actually pay for the qtys transacted

Question 10

producer surplus

Answer 10

difference b/w the P that producers actually receive and the min. P they are w&a to produce a good for the qtys transacted

Question 11

WED

Answer 11

measures responsiveness of Qdd of labour to a change in wages, cp

Question 12

WES

Answer 12

measures responsiveness of Qss of labour to a change in wages, cp