Key Idea: Topic 2.5 covers **three types of demand elasticity**: PED (price), YED (income), and XED (cross-price). Each measures how **responsive** quantity demanded is to a change in one variable.
📐 Price elasticity of demand (PED)
PED = \\frac{\\%\\Delta Q_d}{\\%\\Delta P}🔑 Determinants of PED
💰 PED and total revenue
Firms want to know PED: set prices higher for inelastic goods (petrol) and lower for elastic goods (supermarket sales).
📊 Income elasticity (YED) and cross-price elasticity (XED)
YED sign tells you the **type of good**. XED sign tells you the **relationship between goods**. Always state both the sign AND the magnitude.