Income Elasticity Of Demand(YED)

Question 1

YED

Answer 1

The response of demand to a change in income

Question 2

Formula

Answer 2

% change in QD/ % change in Income

Question 3

Values

Answer 3

<0=Inferior good(if income is low we buy a lot of these things)
0-1= Normal good
> 1= Luxury good

CAN BE POSITIVE OR NEGATIVE

Question 4

In most countries, they have rising incomes. As income levels go up and revenue increases, what type of goods should they sell?

Answer 4

Luxury or normal goods

Question 5

In all countries income levels will go down. What type of goods should they sell?

Answer 5

Inferior goods so that customers are able to afford these