YED and XED Flashcards
1
Q
YED
A
The responsiveness of quantity demanded when real income changes
2
Q
What type of good? (YED)
Positive
Negative
Elastic
Inelastic
A
P: Normal good
N: Inferior good
E: Luxury good
I: Necessity
3
Q
XED
A
Measures the responsiveness of a change in price for related good A to demand for related good B
4
Q
Substitutes:
Example
Type of demand
Relationship
Rule
A
• Xbox and PS
• Competitive demand
• Positive relationship: price rise for one demand rise for the other
• XED is always positive
5
Q
Complements:
Example
Type of demand
Relationship
Rule
A
• Bread and butter
• Joint demand
• Negative relationship: price rise for one, fall in demand for the other
• XED is always negative
6
Q
XED:
1+
0-1
0
A
If XED is:
1+: Close substitute
0-1: Not close substitute
0: Goods aren’t related
