income elasticity of demand Flashcards
1
Q
what is income elasticity of demand (YED)?
A
shows how the changes in consumer income affect demand
2
Q
how to calculate YED?
A
YED = % change in demand / % change in consumer income
3
Q
what is a normal good?
A
when consumer incomes rise, the demand rises, when consumer income falls, the demand falls
4
Q
what is an inferior good?
A
when consumer incomes rise, the demand falls, when consumer incomes fall, the demand rises
5
Q
examples of inferior goods
A
public transport, bread, meal deals
6
Q
what YED value will a normal good have?
A
positive
7
Q
what YED value will an inferior good have?
A
negative
8
Q
examples of normal goods
A
cinema tickets, holidays
