YED

• What does change in income result in

  changes to the demand for products
• What does YED reveal

   how responsive the change in quantity demanded is to a change in income
• How can YED be calculated

  %change in quantity demanded / % change in income
• What is a good with a positive YED value considered to be and a negative YED value

  Positive YED value - A normal good - can be classified as necessities or luxuries

  Negative YED value - Inferior good
• If the YED>1 what does that mean

  Luxury good - demand rises when income rises and demand falls when income falls - examples such as cars
• If the YED is 0 -1 what does that mean

  Necessity good - demand is not very responsive to a change in income - foods like bread
• If YED<0 what does that mean

  Inferior good - Demand rises when income falls - examples are public transport