A Rational Econ
  • Home
  • Blog
  • Resources
    • TI-Nspire
    • Economics
    • Mathematics
  • Contact
    • Meet the Recons
  • Past Papers

Income Elasticity of Demand (YED)

​Income elasticity of demand is the responsiveness of demand to a change in income. 
Picture
Inferior, normal and luxury goods.
  • Inferior goods are goods for which demand falls as income increases e.g. ASDA smart price baked beans. For these goods YED < 0.
  • Normal goods are goods for which demand increases as income increases. Examples include pasta and meats. This type of good is most common. For these goods YED > 0.
  • Luxury goods are also normal goods, however an increase in income causes a higher increase in demand e.g. supercars. These goods have YED > 1.
  • If YED is between -1 and 1 then the good is deemed to be relatively inelastic. However, if the YED is greater than 1 or less than -1 then the good is elastic.
Picture

​A proud provider of notes and information
               - A Rational Econ

Copyright © 2019
  • Home
  • Blog
  • Resources
    • TI-Nspire
    • Economics
    • Mathematics
  • Contact
    • Meet the Recons
  • Past Papers