Income Elasticity of Demand

Question 1

What is the equation of income elasticity of demand?

Answer 1

% change in quantity demanded divided by the % change in consumer income

Question 2

What is the definition of income elasticity of demand?

Answer 2

The responsiveness of quantity demanded to a change in consumer income

Question 3

YED is between -1 and 1

Answer 3

Inelastic

Question 4

What does it mean when a good is income inelastic

Answer 4

Demand changes at a lower proportion than the change in income

Question 5

When is a good inelastic?

Answer 5

When YED is between -1 and 1

Question 6

YED is less than -1 and greater then 1

Answer 6

Elastic

Question 7

What does it mean when a good is income elastic?

Answer 7

Demand changes at a higher proportion than the change in income

Question 8

For what values of YED is a good elastic?

Answer 8

More than 1 and less than -1

Question 9

What value does a normal good have

Answer 9

+ve

Question 10

Name the list of goods which have +ve YEDs

Answer 10

Normal goodsSuperior goodsNecessities

Question 11

What value of YED does an inferior good have?

Answer 11

-ve

Question 12

List the goods which have a -ve YED

Answer 12

inferior goods