Edexcel-Income elasticity of demand 1.2

Question 1

Income elasticity of demand

Answer 1

How responsive the quantity demanded is to a change in income.

Question 2

YED Formula

Answer 2

% change in QD/ % Change in income

Question 3

Luxury

Answer 3

Demand is responsive to a change in income.

Question 4

Luxury value

Answer 4

More than 1

Question 5

Luxury product example

Answer 5

Cars
Holidays

Question 6

Necessity

Answer 6

Demand is not very responsive to a change in income

Question 7

Necessity value

Answer 7

0-1

Question 8

Neccesity product example

Answer 8

Milk
Eggs

Question 9

Inferior

Answer 9

Demand is responsive to a change in income.

Question 10

inferior value

Answer 10

Less than 1

Question 11

Inferior example product

Answer 11

domestic holidays

Question 12

Factors which affect YED

Answer 12

Recession
Economic growth
Minimum wage
Nature of a good

Question 13

Production planning

Answer 13

Plan whether to increase or decrease amount of resources and production from YED

Question 14

Product planning

Answer 14

Different products in portfolio to plan which will benefit from higher or lower demand

Question 15

Financial viability

Answer 15

A company’s ability to generate the required cash flow to fulfil ongoing operational costs and debt repayments.

Question 16

Percentage mark up

Answer 16

Sales-unit cost
Answer/unit cost x 100