1.2.5 income elasticity of demand

Question 1

inferior goods

Answer 1

as incomes of consumers rise = demand falls

Question 2

normal goods

Answer 2

as incomes rise = demand rises

Question 3

income elasticity of demand

Answer 3

a way to measure the responsiveness of demand to changes in consumer income

Question 4

income elastic demand

Answer 4

when demand is highly and positively responsive to a change in income

Question 5

income inelastic demand

Answer 5

when demand only responds a little to a change in income

Question 6

size

Answer 6

how much does demand change when incomes rise or fall

Question 7

sign

Answer 7

positive or negative tell us what kind of good it is

Question 8

yed formula

Answer 8

% change in quantity demanded / % change in income

Question 9

factors influencing yed values

Answer 9

products which have substitutes of a higher quality and higher price are likely to be inferior.
whether the product is considered a luxury.
whether the product is considered a necessity.