ECO unit 1 review:YED

DEFINATION:the responsiveness of the demand for a product when a chenge in income



Formula:YED:%change in demand/%change in income

normal goods:have positive income elasticity

1. normal luxury:income elasticity is grerter than 1 YED>1


2. normal necessity:income elasticity is less than 1 YED<1

Inferior goods:have negative income elasticity