Income Elasticity of Demand (YED)

What does YED stand for in business economics?

• Yield Elasticity of Demand

• Yearly Economic Demand

• Income Elasticity of Demand

• Youth Economic Development

Match the following terms with their correct definitions

• Normal Goods

• Goods for which demand increases as income increases

• Inferior Goods

• Goods for which demand decreases as income increases

• Income Elasticity of Demand

• A measure of how much the demand for a good changes with a change in income.

What does 'demand' mean in a business context?

• The amount of a product that consumers are willing and able to purchase at a given price

• The amount of a product that producers are willing to sell at a given price

• The cost of producing a product

• The profit made from selling a product.

Match the following terms with their definitions

• Innovation

• Financial assistance given by the government to support a business

• Subsidy

• The responsiveness of the quantity demanded of a good to a change in its price.

• Price Elasticity of Demand (PED)

• The introduction of new products or methods

Which product is likely to have a higher YED (Income Elasticity of Demand)?

• Luxury Car

• Basic Food Item

• Designer Clothing

• Generic Medicine

The concept of YED is used to measure the responsiveness of demand to changes in (a)   .

• Price

• Income
• Supply

• Advertising

Match the following products with their likely YED category:

• Bread

• Luxury

• Movie Tickets

• Normal Good

• Sports Car

• Necessity

What is the formula for calculating the income elasticity of demand?

• Percentage change in quantity demanded / Percentage change in income

• Percentage change in income / Percentage change in quantity demanded

• Percentage change in price / Percentage change in quantity demanded

• Percentage change in quantity demanded / Percentage change in price

The income elasticity of demand is interpreted as a measure of how much the quantity demanded of a good responds to a change in consumers' income. Which of the following best describes a good with an income elasticity greater than 1?

• Inferior good

• Normal good

• Luxury good

• Necessity

The factors influencing income elasticity of demand include consumer preferences, the nature of the good, and the level of income. Which of the following is NOT a factor?

• Consumer preferences

• Price of the good

• Nature of the good

• Level of income