income elasticity (YED) Flashcards
1
Q
What is income elasticity?
A
How customers react to a change in income. It creates a relationship between income and demand.
2
Q
If income increases, what will the YED of a luxury good look like?
A
1 +
3
Q
If income increases, what will the YED of a normal good look like?
A
Between 0 and 1.
4
Q
If income increases, what will the YED of an inferior good look like?
A
Negative.
5
Q
What type of good is income inelastic?
A
A normal good.
6
Q
Name 2 inferior goods..
A
- McDonald
- Tesco Value products
7
Q
Name 2 luxury goods..
A
- Bentley
- Michelin restaurants
- Tesco Finest
