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unit 1
price elasticity of demand and income elasticity of demand
YED
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Significance of YED to a business
Business > unit 1 > price elasticity of demand and income elasticity of demand > YED
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Factors Affecting YED
Business > unit 1 > price elasticity of demand and income elasticity of demand > YED
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Cards (11)
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
See all 11 cards