3.2i Income Elasticity of Demand Flashcards
1
Q
What does YED measure?
A
The relationship between the change in quantity demanded for a good and a change in real income
2
Q
YED formula
A
YED = % change in demand ÷ % change in income
3
Q
What YED does a normal necessity have?
A
0-1
4
Q
Normal necessity examples
A
- Staple food products such as bread
- Mass transport
- Takeaway
5
Q
What YED does a luxury have?
A
Above 1
6
Q
Luxuries examples
A
- Fine wines
- High quality chocolates
- Luxury holidays
7
Q
What YED does an inferior good have?
A
Below 0
8
Q
Inferior goods examples
A
- Cheap cars
- Cheap beer
- Cigarettes
