YED (Income elasticity of demand)

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8 Terms

1
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Define Normal goods

goods that consumers demand more of when their incomes increase

2
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Define Inferior goods

goods that consumers demand less of when their incomes increase

3
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Normal good (in calculation)

Answer is positive (if more than 1 luxury, if less than one a necessity)

4
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Inferior good (in calculation)

answer is negative / less than 0

5
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YED > 1

Luxury good, income elastic (Qd & Income strongly directly related)

6
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0 < YED < 1

Normal good, income inelastic (Qd & Income directly related)

7
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YED < 0

Inferior good (Qd & Income inversely related)

8
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Income Elasticity of Demand

the responsiveness of demand to changes in income