10) YED and XED

Question 1

What is YED?

Answer 1

The responsiveness of demand for a good following a change in income

Question 2

What is the formula for YED?

Answer 2

Percentage change in quantity demanded / Percentage change in income

Question 3

What is XED?

Answer 3

The responsiveness in demand for one good following a change in the price of another good

Question 4

What is the formula for XED?

Answer 4

Percentage change in quantity demanded of good X / Percentage change in price of good Y

Question 5

Which goods have negative and positive XED?

Answer 5

Compliments = Negative XED
Substitutes = Positive XED

Question 6

What is an inferior good?

Answer 6

A good where demand falls when income increases

Question 7

What is a normal good?

Answer 7

A good where demand increases when income increases

Question 8

What is a compliment?

Answer 8

A good that is purchased with other goods to satisfy a want

Question 9

What is a substitute?

Answer 9

A good which can be replaced by another to satisfy a want