relevance of ped and yed

regob

hi there im just in the middle of a question which is, how is ped and yed relevant. i take it it means relevant to firms consumers and government. but how exactly are they relevant to this. quick response would be appreciated. thanks very much

i have know idea what they are - don't post acronyms as they are not always homogeneous

regob

Deleted User wrote: »

i have know idea what they are - don't post acronyms as they are not always homogeneous

sorry there

ped= price elasticity of demand

yed = income elasticity of demand

Économiste Monétaire

Don't be so lazy. The answer is in any principle's of economics book, even Leaving Cert books. You'll learn nothing by copying and pasting answers.

P.S. Google is your friend.

Time Magazine

UCD_Econ wrote: »

Don't be so lazy. The answer is in any principle's of economics book, even Leaving Cert books. You'll learn nothing by copying and pasting answers.

P.S. Google is your friend.

+1

Also, zaraba, what's that GDP thing you keep referring to? :pac:

Flamed Diving

Stern, but fair. Do some work like the rest of us had to!

Flamed Diving

Antithetic wrote: »

+1

Also, zaraba, what's that GDP thing you keep referring to? :pac:

God-Directed-Profit?

Antithetic

Antithetic wrote: »

Also, zaraba, what's that GDP thing you keep referring to? :pac:

I don't know, I'm just a BESS student.

regob

sorry to everybody who poseted negative comments to my original post, yous are being very prisumptious. do ya honestly think i just thought oh i couldnt be bothered looking ill just ask boards. i looked through my lc notes couldnt find anything, lc text book sold it before i went to uni. looked through economics 8th edition begg, couldnt find a definite answer to my question, lets face it that book is ****, i looked through foundations of economics ny andrew something cant remember his last name. i used this as a last resort. if ya dont want to help me fair enough, just dont call me lazy wen ya dont have a clue about me.

Flamed Diving

Ok, then try to be more specific in your question. Everything you wrote was quite vague.

regob

Flamed Diving wrote: »

Ok, then try to be more specific in your question. Everything you wrote was quite vague.

basically the question, is wat are ped and yed and hoe are they relevant today, obviously i can answer the first part. its just the second part thats getting me.

Read Mankiw, Microeconomics

regob

regob wrote: »

lets face it that book is ****,

In your expert opinion?

Flamed Diving

regob wrote: »

basically the question, is wat are ped and yed and hoe are they relevant today, obviously i can answer the first part. its just the second part thats getting me.

Ok, for PED imagine you are the minister for finance and you are trying to raise extra funds for the exchequer. There are two goods in the economy: beef and cigarettes. The PED for beef is high and low for tobacco. Which good do you raise taxes on in order to raise funds? If you raise beef tax, demand for this product will drop too low and you will have farmers on your case. But if you raise the price of ciggies, people will still buy the same amount, so you raise tobacco taxes. Now take this logic and try apply it to consumers.

For YED, again imagine you are in charge of the economy. The economy is booming and people are consuming more luxury goods. Inflation is a bit too high for your liking and you wish to curtail this using fiscal policy. Because the economy is booming the PED for all goods is quite low so you cant simply raise taxes there (because this wont affect demand), so you raise income tax instead. This means that people have less income at their disposal and should begin to switch to normal goods, thus lowering inflation.

regob

thats really helpful thanks very much.

regob