Elasticity Flashcards
1
Q
What does YED mean?
A
Income elasticity of demand
2
Q
What is the equation for elasticity?
A
(% change in demand) / (% change in price)
3
Q
What is the equation for YED?
A
(% change in quantity demand) / (% change in consumer income)
4
Q
What are some key things to know about YED
A
If the answer is negative - an increase in income decreases demand. A decrease in income increases demand
This happens for most “inferior” products
5
Q
What is an “inferior” product?
A
A product which is cheaper/not branded
