1.2|2 Income Elasticity of Demand (YED) Flashcards
1
Q
What is Income Elasticity of Demand (YED) ?
A
Measures the responsiveness of Quantity Demanded(Qd) to changes in Income (Y)
2
Q
What is the Formula for YED ?
A
% Change Qd / % Change Y
3
Q
What will the YED be for a Normal Good ?
A
Positive
4
Q
What is a Normal Good ?
A
A good which is demanded more as income rises or less as income falls
5
Q
What will the YED be for an Inferior Good ?
A
Negative
6
Q
What is an Inferior Good ?
A
A good which is demanded less as income rises or more as income falls.
7
Q
What is a special type of Normal Good called ?
A
Luxury Good
