Production planning - Significance of YED

Question 1

2 main reasons why income elasticity of demand is important to businesses

Answer 1

1) production planning
2) product Switching (notes)

Question 2

Link between production planning and income elasticity (YED)

Answer 2

If a businesses are aware of the YED of their product & can predict changes in income …

Then they can plan wether to increase/decrease production to meet demand.