YED

YED

- shift in the demand curve

- Related to income which is a non-price determinant of demand, changes in income are illustrated as a shift in the demand curve

Formula for YED

% change in quantity demanded / % change in income

Inferior good

A goods that has their demand decrease when income increases - Cheap imitations, own brands

Normal good

a good that consumers demand more of when their incomes increase

Luxury goods

Takes up a larger % of income when income rises Superior goods or service - income elastic - Electronic gadgets, vacations etc.

Necessities

Takes a smaller % of income when income begins to rise - Demand increases but smaller percentage than income Products consumers need to buy to meet their needs/survival - Income inelastic

Draw the graph including all of the above

values of each

Inferior goods = YED<0

Necessities: 0