Uses if limitations of YED Flashcards

1
Q

What are some uses of YED

A

Helps a business to predict how sales will respond if there are changes in the economy

Set sales targets in a boom or recession

Helps a business manage their product portfolio. For example they decide they need to invest into developing their inferior products.

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2
Q

What are some cons of YED

A

Difficulty to calculate accurately

Maybe based on past sales data - is the data accurate today

Assumes all other factors stay the same - For example: The level of competition

Could be based on survey results - The answers given may not be inline with reality.

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3
Q

What is YED

A

YED stands for income elasticity of demand and measures how responsive demand is to a change in income.

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