YED Flashcards
1
Q
YED measures…
A
Measures responsiveness of demand to changes in customer income
2
Q
YED formula
A
% ▲ in quantity demanded
—————————————
% ▲ in income
3
Q
Normal goods
A
YED is 0-1
D + when IC +
E.g. branded clothes
4
Q
Luxury goods
A
YED is >1 (income elastic)
D + as IC +
E.g. designer branded clothes
5
Q
Why is YED useful?
A
Knowing if your product will fall in demand means you can;
Reduce stock
Reduce workforce
