YeD Flashcards
1
Q
What is YeD?
A
Income elasticity of demand.
It measures the responsiveness of quantity demanded to a change in income.
2
Q
What happens when YeD is positive?
A
The good is a normal good.
3
Q
What happens when YeD is a low positive?
A
The good is a normal necessity.
4
Q
What happens when YeD is a high positive?
A
The good is a normal luxury.
5
Q
What happens when YeD is negative?
A
The good is an inferior good.
6
Q
What happens when the YeD is a negative close to 0?
A
The good is less inferior.
E.g. milk (organic/non organic)
7
Q
What happens when the YeD is far from 0?
A
The good is really inferior.
E.g. lucky 5p beans.
8
Q
What is the formula for YeD?
A
percentage change in income
