1.2.5

Question 1

What is YED?

Answer 1

a measure of how responsive demand is to a change in income which will determine an increase or decrease in revenue.

Question 2

What is the equation for YED?

Answer 2

percentage change in quantity demanded/percentage change in income

Question 3

When will a product be income elastic?

Answer 3

when YED is greater than 1 or less than -1

Question 4

When will a product be income inelastic?

Answer 4

when YED is between -1 and 1

Question 5

Definition of income elastic

Answer 5

a change in income will lead to a more than proportional change in demand

Question 6

Definition of income inelastic

Answer 6

a change in income will lead to a less than proportional change in demand

Question 7

Name 2 factors that influence YED

Answer 7

the level of income of a consumer, standards of living

Question 8

Name 2 more factors that influence YED

Answer 8

Is the good a necessity or a luxury, the economic cycle