XED + YED Flashcards
1
Q
What is the XED formula?
A
%change in quantity demanded of A / %change in the price of product B
2
Q
What does XED measure?
A
Measures the responsiveness of demand for one good to changes in the price of another good
3
Q
What do substitute goods have?
A
A positive XED
4
Q
What do complement goods have?
A
A negative XED
5
Q
What do unrelated goods have?
A
Zero XED
6
Q
What is YED?
A
Measures the responsiveness of demand to changes in income
7
Q
What is the YED formula?
A
%change in quantity demanded / %change in income
8
Q
What do Inferior Goods have?
A
A negative YED
9
Q
What do Normal Goods have?
A
A positive YED
10
Q
What are Normal Goods with a YED between 0 and 1?
A
- Classed as income inelastic
- They tend to be necessities
11
Q
What are Normal Goods with a YED above 1?
A
- Classed as income elastic
- They tend to be luxury goods
