# micro3 More Options: Make a Folding Card

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• There is still have income elasticity right? and what is it and how to calculate?
• *PS negative sign (-)  is included in ans
• Ey=
• Yeap! Income elasticity of demand (Ey)= measures the degree of responsiveness of quantity demanded to changes in income
• %Δ  Q%Δ  y
• The formula is
• Or
• Q2 -Q1(Q2 + Q1) ÷ 2
• y2 -y1(y2 + y1) ÷ 2
• Is that all for income elasticity?
• Negative Ey y↑, Q ↓(inferior goods)Postive Eyy↑,Q↑
• Elastic= Ey > 1= %Δ  Q > %Δ  y(normal goods)
• Nope, we need to know how to differentiate it. So it split into
• Inelastic=Ey < 1= %Δ  Q < %Δ  y(essential goods)
• So how about cross elasticity of demand?
• The formula is
• *PS negative sign (-)  is included in ans
• Ex=
• Cross elasticity of demand (Ex)= measures the degree of responsiveness of quantity demanded of a good
• %Δ  Q%Δ  y
• Or
• Q2 -Q1(Q2 + Q1) ÷ 2
• P2 -P1(P2 + P1) ÷ 2
• How we differentiate it?
• Elastic (strong)= Ey > 1= %Δ  Q > %Δ  P
• This will be more easier.Negative ExP↑, Q ↓(complementary goods)
• Positive ExP↑, Q ↑(substitutes goods)
• Inelastic (weak)= Ey < 1= %Δ Q < %Δ P
• What is the law of supply?
• It is the quantity which producersare willing and able to offer on the market at any given price over a givenperiod of time, ceteris paribus.
• What is the factors of supply?
• The factors of supply are-Production costs-Technological advancement-Prices of alternative goods-Joint products- External conditions- Number of suppliers-Government influences
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