LS15 XED & YED

Question 1

XED

Answer 1

Cross price elasticity of demand

Question 2

XED Formula

Answer 2

% change in the quantity demanded of product A / % change in price of product B

Question 3

Substitute Goods

Answer 3

These goods have a positive XED

Question 4

Complement Goods

Answer 4

Negative XED

Question 5

Unrelated Goods

Answer 5

0 XED

Question 6

Definition of XED

Answer 6

Cross price elasticity of demand (XED) measures the responsiveness of demand given a change in price of another good

Question 7

YED

Answer 7

Income elasticity of demand (YED) measures the responsiveness of demand given a a change in income

Question 8

YED Formula

Answer 8

% change in quantity demanded/ % change in income

Question 9

Inferior Good

Answer 9

Negative YED

Question 10

Normal Good

Answer 10

Positive YED

Question 11

Normal goods that have a YED between 0 and 1

Answer 11

These goods are classed as income inelastic and are necessities

Question 12

Normal goods that have a YED larger than 1

Answer 12

These goods are classed as being luxury goods