Income Elasticity of Demand (YED)

Define Income Elasticity of Demand

• YED measures the degree of responsiveness of quantity demanded for a good to a change in consumer's income, ceteris paribus

• YED measures the degree of responsiveness of demand for a good to a change in consumer's income, ceteris paribus

• YED measures the degree of responsiveness of consumer's income to a change in quantity demanded for a good, ceteris paribus

• YED measures the degree of responsiveness of consumer's income to a change in demand for a good, ceteris paribus

Consumers demand less of this type of goods when their income increases.

• Low grade rice

• salt

• bungalore

• furniture

Consumers demand more of this type of good when their income rises.

• Normal good
• Inferior good
• Elastic good
• Substitution good

If the income elasticity of market demand is negative, most consumers view the good as:

• a luxury good

• having many imperfect substitutes.

• an inferior good.

• a normal good.

If the YED of a good is assessed to be 0.7, the good can be classified as a

• salted fish

• books

• salt

• jewelerys

Which one is the correct formula for Income Elasticity of demand?

• Percentage change in income / Percentage change in quantity demand for a good

• Percentage change in quantity demand for a good / Percentage change in income

• Percentage change in supplied for a good / Percentage change in income

• Percentage change in quantity demand for a good / Percentage change in its price

This car are referring to

• Normal Goods

• Inferior Goods

• Luxury Goods

• Compulsary Goods

YED = 0 is referring to

• Normal Goods

• Inferior Goods

• Luxury Goods

• Necessity Goods

When YED value is positive and the value is 0.5

• Normal Good

• Inferior Good

• Luxury Good

• Necessity Goods

How many categories of YED exits?

• Five

• Three

• One

• Four