YED quiz

What is the formula for calculating Income Elasticity of Demand (YED?)

• % change in quantity demanded / % change in income

• % change in income / % change in quantity demanded

• % change in income / % change in sales

• % change in quantity demanded / % change in price

Here, a large change in income results in a very small change in demand. This product is:

• Income inelastic

• Income elastic

Here, a small change in income results in a large change in demand. This product is:

• Income elastic

• Income inelastic

As income increases, demand for this product falls:

• Normal good

• Luxury good

• Inferior good

Which of these products are likely to be inferior goods?

• Bus travel

• Restaurant meals

• Frozen vegetables

• Holidays abroad

Which of these products are likely to be luxury goods?

• Private education

• International air travel

• Canned meat

• Bus travel

Holidays abroad have a YED of 1.31. Holidays abroad are:

• Income elastic

• Income inelastic

The income elasticity of demand for new cars in the Netherlands is 1.47:

• Luxury good

• Inferior good

Inferior goods have a:

• Negative YED

• Positive YED

When YED is +1.0, what will be the effect of a 10% rise in incomes?

• No change in demand

• A 10% fall in demand

• A 10% rise in demand

• A 20% rise in demand