Income Elasticity of Demand (YED) Flashcards
1
Q
YED definition
A
Measures the responsiveness of quantity demanded given a change in income
2
Q
YED equation
A
YED = percentage change quantity demanded / percentage change income
3
Q
Normal Goods
A
Where income increases and quantity demanded increases - positive YED
e.g. foreign holidays
4
Q
Inferior Goods
A
Where income increases and quantity demanded falls - negative YED
e.g. fast food
5
Q
Normal Goods supply demand curve
A
Demand shifts out, increasing q and increasing p
6
Q
Inferior Goods supply demand curve
A
Demand shifts in, decreasing q and decreasing p
