1.2.5 YED
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10 Terms
What are the 3 types of products based on price and quality?
Inferior
Normal
Luxury
What is YED?
A calculation used by a business to estimate how demand will change with changes in income
If income increases, what happens to the demand for inferior goods?
It decreases
What is the YED value of inferior goods?
Less than 0
If income increases, what happens to the demand for normal goods?
It increases a bit
What is the YED value of normal goods?
0-1
If income increases, what happens to the demand for luxury goods?
It increases more
What is the YED value of luxury goods?
More than 1
What is the formula for YED?
% change in quantity demanded / % change in income
What is the formula for percentage change in price?
(New price - old price) / old price x 100