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1.2.4 Price elasticity of demand & 1.2.5 Income elasticity of demand Typeit
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YED stands for income elasticity of demand. We cannot use the letter I as that is reserved for the word , so we replace it with the letter Y.
The YED formula is % change in demanded / % change in .
YED values are NOT expressed as a .
YED measures the of demand to a change in the income of consumers.
If a YED value is positive this means the product is a or necessity good. This means that demand for this good will when incomes increase.
If a YED value is negative this means the product is . This means that demand for this good will when consumer incomes increase. For example if a customer gets a better job with better pay they will no longer demand pot noodles and instead may demand takeaways and restaurant meals.
Some businesses will trade specifically on YED or inferior products, e.g. Primark, Poundland, Poundworld.
Some businesses will carry a range of products to cater for all incomes, e.g. Sainsbury's Taste the Difference range and its inferior basics range