Income elasticity of demand

Question 1

What is YED?

Answer 1

Responsivness of demand to a change in income

Question 2

How do you calculate YED?

Answer 2

Precentage change in quantity demanded/ precentage change in income

Question 3

What are necessities? And what is their YED?

Answer 3

-They are basic goods that consumers need to buy
-Demand for these goods a re inelastic and will be around 0.5

Question 4

What are luxury goods? And what is their YED?

Answer 4

-Goods that consumers are likely to buy if they can afford them. These are wants

-Demand for these goods are elastic and will be more than 1

Question 5

What is the YED of normal goods?

Answer 5

They will be a positive YED

Question 6

What are inferior goods?
And what is their YED?

Answer 6

-Goods for which demand will fall as income rises or falls

-They will have a negative YED

Question 7

What is excise duty?

Answer 7

government taxes on certain goods like alchahol or ciggaretes that are sold in the country