Income elasticity of demand

• YED = income elasticity of demand is the responsivenesses of the quantity demanded for a good to a change in consumer income.if YED is greater than 1, the good is Income elastic. If YED is smaller than 1, the good is income inelastic. If YED is equal to 1, the good has unit elasticity.
• YED formula = % change in quantity demanded / % change in income
• Factors influencing YED = Income, Interest rates, Unemployment, Inflation.
• Significance of YED = understand consumer behaviour, market segmentation and product development.