income elasticity

Question 1

yed

Answer 1

degree of responsiveness of demand following a change in income

Question 2

equation for yed

Answer 2

percentage change in QD/

percentage change in income

Question 3

income elastic demand( luxury products)

Answer 3

when demand is responsive to change in consumer’s real income
yed>1

Question 4

income inelastic demand (necessities)

Answer 4

when demand is unresponsive to a change in consumer’s real income
yed<1