YED Flashcards
1
Q
Income elasticity of demand
A
A measure of the responsiveness of demand to changes in income
2
Q
How to calculate YED
A
YED= percentage change in quantity demanded/percentage change in income
3
Q
For what is YED <0
A
Inferior good
4
Q
For what is YED > 0
A
Normal goods
5
Q
For what is YED > 1
A
Luxuries (income elastic)
6
Q
When 0 < YED < 1
A
Necessities (income Inelastic)
7
Q
Why fo we need to know YED
A
Understanding consumer income can help manager to know how it
influences demand for a good and the position of the demand curve
