Session 13 - YED Flashcards
1
Q
What does YED stand for
A
Income elasticity of demand
2
Q
What is the formula for YED
A
% change in quantity demanded / % change in income
3
Q
What does it mean if a product has a YED greater than +1
A
Elastic (luxury goods)
4
Q
What does it mean if a product has a YED greater than 0 but less than 1
A
Inelastic (normal goods)
5
Q
What does it mean if a product has a YED less than 0 (has a -)
A
Inelastic (Inferior goods)
6
Q
What happens to the demand of elastic (luxury) goods
A
As incomes rise, demand rises
7
Q
What happens to the demand of inelastic (normal) goods
A
As incomes rise, demand will see a small, or maybe no shift in demand
8
Q
What happens to the demand of inelastic (inferior) goods
A
As incomes rise, demand decreases
9
Q
How is % change calculated
A
(New - old) / old x 100
