Uses if limitations of YED Flashcards
1
Q
What are some uses of YED
A
Helps a business to predict how sales will respond if there are changes in the economy
Set sales targets in a boom or recession
Helps a business manage their product portfolio. For example they decide they need to invest into developing their inferior products.
2
Q
What are some cons of YED
A
Difficulty to calculate accurately
Maybe based on past sales data - is the data accurate today
Assumes all other factors stay the same - For example: The level of competition
Could be based on survey results - The answers given may not be inline with reality.
3
Q
What is YED
A
YED stands for income elasticity of demand and measures how responsive demand is to a change in income.
