2.6 income elasticy of demand Flashcards
(7 cards)
1
Q
what is YED
A
the responsiveness of demand to changes in income
2
Q
whats a normal good
A
a good where demand rises as income rises and vice versa
3
Q
whats an inferior good
A
a good where demand falls as income rises and vice versa
4
Q
how to calculate YED
A
% change in quantity demanded / % change in income
5
Q
how to identify a normal good
A
a positive YED sign
6
Q
how to identify an inferior good
A
a negative YED sign
7
Q
factors that influence YED
A
is the good a luxury or necessity
is the good normal or inferior
time under consideration
proportion of income spent on the good
– availability of substitute goods
