1.2.5 YED

Question 1

What does YED stand for?

Answer 1

Income elasticity of demand

Question 2

What is Income elasticity of demand?

Answer 2

A measure of the responsiveness of demand to a change in income

Question 3

What is the relationship between price and demand?

Answer 3

The relationship between price and demand was straight forward they always moved in the opposite direction

Question 4

Is the relationship for YED positive or negative?

Answer 4

Income elasticity of demand can be negative or positive

Question 5

What is a Normal good?

Answer 5

When demand for a product increases when incomes increase we call this a normal good

Question 6

Normal goods will always have a _____ income elasticity of demand?

Answer 6

Positive

Question 7

What is an Inferior good?

Answer 7

When demand for a product decreases when incomes increase we call this an inferior good

Question 8

Inferior goods will always have a _____ income elasticity of demand?

Answer 8

Negative

Question 9

What is the formula for YED?

Answer 9

% change in quantity demanded / % change in income) = YED

Question 10

When the YED coefficent is -1

Answer 10

Income inelastic

Question 11

When the YED coefficent is < -1 or > +1

is income elastic or inelastic

Answer 11

Income elastic

Question 12

is -1.4 Income elastic or inelastic?

Answer 12

Income inelastic

Question 13

is + 0.7 Income elastic or inelastic?

Answer 13

Income elastic

Question 14

Income elasticity of demand is determined by?

Answer 14

Whether the good is a necessity or a luxury

The level of income of a consumer