YED And PED

Question 1

Luxury goods

Answer 1

Normal goods, demand changes a lot more than income
always a +1, strong correlated
Eg/ +1.09 = luxury goods

Question 2

Normal goods

Answer 2

Positive correlation
+ % in QD/ + % in Y

Question 3

Necessities

Answer 3

Normal good
Demand changes less than income
Weak correlation
Eg. +0.2 , fruit, cleaning products, essentials, may upgrade brand but not spend loads of extra income

Question 4

Inferior goods

Answer 4

Negative correlation between income and QD
Buy less of product as a result of income increase
Eg. -0.5, any with a —

Question 5

Example of inferior goods

Answer 5

Eg. If there is a -0.2 YED
Might get the bus, cheap, staycation- fall in income may choose to stay at home and take a cheaper holiday ie Butlins

Question 6

Example of PED Inelastic

Answer 6

Ferrari car, if the price goes up- not much demand change as the people who are buying those sort of cars are already willing to spend that money, s the change is not that stretchy, not elastic so INELASTIC

Question 7

Example of PED elastic

Answer 7

Soap, if price goes up, people will just choose a different soap brand, they’re stretchy, elastic