Economics: YED (Income elasticity of demand)

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10 Terms

1
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YED

measures the relationship between a change in quantity demanded and a change in real income

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YED formula

% change in Q demanded / % change in income

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Normal Good

quantity demanded rises as income rises and vice versa
YED is positive

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Necessity Good

type of normal good

YED is between 0 and 1

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Luxary Good

type of normal good

YED is bigger than 1

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Inferior Good

quantity demanded falls as income rises and vice versa
YED is negative

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High Elastic

YED > 1 or YED < -1

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Unitary Elastic

YED = 1,-1

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inelastic Elastic

-1 < YED < 1

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Zero Elastic

YED = 0