7 Income elasticity Flashcards
1
Q
Formula for Income Elasticity
A
Percentage change in QD divide by percentage change in income
2
Q
What factors do you use to calculate the value of Income elasticity of demand
A
Neccesites
Normal goods
inferior goods
Luxury goods
3
Q
Define Discretionary expedentiure
A
Spending that is not automatic
4
Q
Define Market failure
A
Markets lead to ineffeicenty
5
Q
Define merit goods
A
Goods provided by private sector
6
Q
Why does government need to interfere in market failure?
A
Externalities
Lack of competition
Missing market
Lack of information
7
Q
Define Free rider
A
Individuals enjoy good while others have to pay.
