PEOD/YEOD (markets)

Question 1

what is PEOD ?

Answer 1

price elasticity of demand

- measures responsiveness of demand to change in price

Question 2

what is YEOD ?

Answer 2

income elasticity of demand

- measures responsiveness of demand to change in income

Question 3

normal goods

Answer 3

income increase so does demand
positive yeod value
e.g. cars

Question 4

luxury goods

Answer 4

demand grow faster than rate of real income
+ YEOD 1>
e.g gucci

Question 5

necessities

Answer 5

demand grow slower rate than income
+YEOD 1<
e.g toothpaste

Question 6

inferior goods

Answer 6

demand decreases as income rises

• YEOD
  e. g Tesco value beans