YED

• YED = Income elasticity of demand
• YED measures the responsiveness of a change in demand to a change in income
• YED formula

  
• Inferior goods are those which see a fall in demand as income increases.
• Yed is always negative for inferior goods
• Yed will always be positive for a normal good
• Income inelastic is normal goods between 0 - 1
• Income inelastic are necessitnecessity goods
• Income elastic is a normal good between 1 and infinity
• Income elastic is ually luxury goods
• A normal good is when YED>0 : a rise in income will lead to a rise in demand for the good